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Trade tensions between the United States and China are likely to have an adverse impact on global growth even if the threatened tariffs are never imposed. Conflict between the world's two largest economies is creating significant uncertainty for businesses that threatens their global supply chains and future investment plans.The threat of tariffs will have a much more damaging and chilling impact on investment decisions that depend on global supply chains – even if the import taxes are never actually imposed.U.S. officials have indicated it could take six months or more to reach a final decision on tariffs which implies an extended period of damaging uncertainty.Since 1947, the broad thrust of international economic policies has been toward greater openness to trade and investment, led by the U.S.Successive rounds of trade negotiations have lowered average tariff barriers and tried to control non-tariff barriers on trade and investment to create a more predictable environment for business.Whatever the merits of the current dispute, the threat of tariffs has injected a significant additional source of uncertainty into the global economy that is likely to inhibit investment and output growth.
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