IMF: Tariffs won't reduce US trade gap

Analysts say targeting deficit likely to hit business confidence, growth instead

Escalating US tariffs on China will not fix the trade deficit nor weaken the US dollar, International Monetary Fund economists said on Wednesday, as the US Congressional Budget Office, or CBO, increased estimates of the gravity of the duties' effects on the country's economy.

"Higher bilateral tariffs are unlikely to reduce aggregate trade imbalances, as they mainly divert trade to other countries," IMF chief economist Gita Gopinath said in a foundation blog post "Taming the Currency Hype". It was co-authored by fellow IMF researchers Gustavo Adler and Luis Cubeddu.