Tensions have soared in recent months with Donald Trump's administration rolling out billions of dollars in tariffs against China in a bid to tackle its trade deficit and rein in what Washington views as unacceptable trade practices by the Asian giant.
With weakening growth and uncertainties over trade, smoothing the economic impact of de-risking "is a very hard act of judgment that policymakers in China have to struggle with", Vitor Gaspar, director of the IMF's fiscal affairs department, told reporters at a separate briefing on its Fiscal Monitor, a report that tracks the state of countries' public finances, on Wednesday.
He continued: "Trade policy reflects politics and politics remain unsettled in several countries, posing further risks".
The OECD has also revised down its global growth forecasts.
Trade is among the biggest downside risks to the global economy, Kim told reporters on Thursday in Bali, Indonesia - an emerging economy that he cited as one under threat by a trade dispute.
Risks to the global outlook have risen in the last three months and tilt to the downside, the International Monetary Fund said.
It's not just the world's two most powerful economies that stand to be affected by trade policy.
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The fund kept its forecast for growth in the Chinese economy unchanged at 6.6 percent this year. China was the fastest growing economy in 2017 as it was ahead of India by 0.2 percentage points. That could mean that Britain will have to raise more taxes in the future because government-owned asset growth will not provide as much support to the economy.
"Broadly speaking, we see signs of lower investment and manufacturing, coupled with weaker trade growth", Dr Obstfeld said.
The International Monetary Fund (IMF) has forecast Switzerland's economy will grow by 3% by the end of 2018. More than half of the 51 economists surveyed recently by the National Association for Business Economics predict the next recession is likely to hit in 2020.
If the trade war continues, it could take a significant bite out of global growth, according to the fund.
IMF's forecasts for Hong Kong's economic outlook are mixed: it raises its forecast for 2018 by 0.2 percentage points to 3.8%, while cutting its forecast for 2019 by 0.3 percentage points to 2.9%.
But the United States tax cuts and rising spending that have boosted growth, helping compensate for the impact of the growing trade conflict, could spark a sudden "inflation surprise", and in turn lead to faster-than-expected rise in U.S. interest rates, according to the fund.
The risk of a global financial crisis initiated by sharp capital outflows in emerging markets due to the divergence of monetary policies in the United States and developing countries remains small but will grow as the Federal Reserve continues to raise its interest rates, as it is expected to do this year and next.
USA growth will decline once parts of its fiscal stimulus go into reverse.