The International Monetary Fund (IMF) has warned that the tariffs imposed by the US and the associated rise in import costs are undermining investment in the economy, raising production costs for US exporters and further suppressing private savings.
„In the US, rising import costs and heightened uncertainty are deterring investment, reducing demand for imports. Tariffs on intermediate goods (used to produce final goods) act as a tax on US producers, raising the cost of exporting finished goods, the report said.
Furthermore, the IMF estimates that while increased revenue from import tariffs would increase government saving, this increase would be offset by a decline in private saving in the US.
„Further increased uncertainty over trade policy would weigh on firms' investment decisions and worsen growth prospects. It would also hamper their ability to optimize inventories, which could lead to short-term volatility in output, the fund added.