The International Monetary Fund further reduced its global economic growth forecast for 2019 on Tuesday, citing risks such as rising trade tensions and a tightening of monetary policy by the Federal Reserve.
But failing to reach an agreement would hurt the United States economically and would also hinder Chinese efforts to revitalize its economy, warns the IMF. The Chinese economy grew by 6.6% in 2018, its slowest pace in almost 30 years.
According to the fund, another risk to global economic growth is a change in monetary policy by central banks, particularly the Federal Reserve.
The US Federal Reserve reversed its policy early in the year, eliminating all expectations of a single rate hike in 2019. It follows four US central bank rate hikes in 2018. The Fed's reversal contributed to the hot start of the market in 2019. The S & P 500 recorded its largest rise in the first quarter since 1998.
However, the IMF said: "The implied trajectory of expected market key rates remains below the expectations of the Federal Open Market Committee, which could make the market likely to be re-evaluated if US economic data remains strong. interest rate, a renewed appreciation of the dollar and more difficult financial conditions for emerging and developing countries whose balance sheets present vulnerabilities. "
Other risks put forward by the IMF include a Brexit without agreement, political uncertainties as several countries around the world hold elections and geopolitical tensions in East Asia.
Jacob Pramuk of -CNBC contributed to this report.
Subscribe to CNBC on YouTube.