What’s ahead in the Trump tariff wars?

Today,PresidentTrump’stariffwarsareatcrossroads.Ifcompromisecanbefound,collateral globaleconomyinamatterofmonths.

- viewed about the US-China trade war on the popular current affairs program “The Point with Liu Xin” by China Global Television Network (CGTN) and by a leading Portuguese newspaper.

Here are some of the highlights.)

Trade wars and Chinese equities

Recent losses in Chinese equity markets have increased since June, due to concerns about liquidity, bonds, and trade. Liquidity concerned have been relieved after China’s central bank injected $ 28 billion into the market in July. Some bond defaults will occur, but concerns have been exaggerated.

In turn, the trade spat is contributing to overall economic uncertainty, so its market impact is more indirect.

Finally, comparisons with the market fall of mid-2015 are hollow. Prior to market correction in summer 2015, Shanghai index had a P/E ratio of 25; in June, it was 14. This is not a speculative market.

Currency depreciation

Trump’s tariff wars will escalate before they will de-escalate. US tariffs are already climbing to $50 billion and so will Chinese retaliation. The question for now is whether these tariffs will then increase to $200 billion or even $500 billion, as Trump has already threatened.

With $ 50 billion stakes, the US tariff impact against China would probably be limited to

US is more exposed to collateral damage ( US imports far more from China than China from the US), the US would likely lose an additional 0.1 percent of growth.

If the stakes would increase to $200 billion-$500 billion, the net impact would increase 4-10 times, accordingly. The math is clear, which is why even US farmers, who voted for Trump, want an end to the tariff war and why the US Chamber of Commerce, which initially supported Trump’s trade offense, has launched a campaign against it.

Outlook for trade war

remain just bilateral; it has potential to spill over multilaterally, even globally, as signals already attest. If things go further, several economies

The historical precedent is the Smoot-Hawley Act of 1930 and protectionism which paved the way for radical extremism in Europe, World War 2, the Holocaust, and atom bombs in Hiroshima and Nagasaki. That’s an extreme nightmare scenario, however.

For all practical purposes, the key question now is this: Can a full-scale trade war be avoided? Most big com-

believe that’s the case. So that’s their base scenario for now.

Now, if their forecasts prove wrong, then all bets are off.

Geopolitics by other means