A trade war between the US and China will shrink the world economy by 0.8 per cent by the end of 2020, according to a new report from the International monetary Fund (IMF).

In the IMF’s latest world economic Outlook report, released on Tuesday, IMF economic adviser Geeta Gopinath cited global trade as one of the main reasons for the lowest growth estimates in a decade.

“A notable feature of sluggish growth in 2019 is the sharp and geographically broad slowdown in manufacturing and global trade,” she wrote.

It is expected that growth in 2019 will be at the level of 3 percent, which is 0.3 points less than expected in the April report and the lowest level since the global financial crisis in 2008 and 2009. It is expected to rise to 3.4 percent next year, down 0.2 points from April.

President trump’s trade war with China has led to tariffs on about $360 billion of Chinese imports into the United States, and more are scheduled to be secured in December. China has retaliated against almost all U.S. exports to China, focusing on agricultural products.

Hopes of de-escalating the trade war rose last week when trump and Chinese Vice Premier Liu he announced an agreement on an initial partial trade deal. But the deal is not yet complete and is considered a very limited set of issues.

Whether trump can craft a more comprehensive deal that would cut tariffs remains an open question, as does the possibility of imposing new tariffs in December.

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