By Jeff Mason
WASHINGTON, Aug 21 (Reuters) - U.S. President Donald Trumpon Wednesday said he was "the chosen one" to address tradeimbalances with China, even as congressional researchers warnedthat his tariffs would reduce U.S. economic output by 0.3% in2020.
Trump told reporters his life would be easier if he had notmounted a trade war with China. But he defended his actions andsaid he believed a trade deal between the world's largesteconomies was still possible.
"I am the chosen one ... so I am taking on China. I'm takingon China on trade. And you know what? We're winning," Trumpsaid, claiming a title often used to refer to religious figuressuch Jesus and Mohammed.
Trump acknowledged for a second consecutive day that thetrade war with China could harm the U.S. economy, although heinsists a recession is not on the horizon.
The nonpartisan Congressional Budget Office on Wednesdaybecame the latest independent institution to warn about theconsequences of tariffs Trump has ordered imposed against Chinaand a host of other countries.
The CBO said changes in U.S. and foreign trade policiessince January 2018 will reduce inflation-adjusted U.S. grossdomestic product by 0.3 percent from what it would be otherwisein 2020.
The International Monetary Fund has said that globaleconomic output could be reduced by as much as 0.5% in 2020 as aresult of tariffs.
CBO said the tariffs were boosting domestic prices, reducingconsumers' purchasing power and boosting the cost of businessinvestment. Real income for the average U.S. household was alsoexpected to drop by 0.4 percent, it said.
Trump on Tuesday told reporters he had to confront Chinaover trade even if it caused short-term harm to the U.S. economybecause Beijing had been cheating Washington for decades.
China's Foreign Ministry appeared to downplay the comments,emphasizing the need for dialogue to resolve differences ontrade issues but threatened to retaliate if Washington proceededwith an $8 billion arms sale to Taiwan.
Chinese Foreign Ministry spokesman Geng Shuang reiterated athreat to put sanctions on U.S. companies which sell weapons toTaiwan, saying such sales are a serious interference in China'sinternal affairs and violation of Chinese sovereignty.
Washington on Tuesday formally announced approval of apossible sale of 66 Lockheed Martin F-16 fighter jets toTaiwan.
Trump's tariff plans have roiled global markets and unnervedinvestors as the trade dispute between the world's two largesteconomies stretches into its second year with no end in sight.
Growing concerns that the trade war could trigger a possibleU.S. recession weighed on financial markets last week and seemedto put administration officials on edge about whether theeconomy would hold up through the November 2020 presidentialelection.(Reporting by Jeff Mason and David Morgan; additional reportingby Makini Brice; writing by Andrea Shalal; Editing by CynthiaOsterman)