U.S. Outlook: China trade fight takes center stage
U.S. stock declines slowed after heavy losses overnight in Asian and European equity markets in reaction to the Trump administrations $50B tariff announcement against China.
China responded swiftly overnight, rolling out tariffs of its own on 128 products, or $3B of U.S. imports, including California wine, fruit, and almonds.
For more on this, see highlights of my report below, followed by a link to the full U.S. Outlook, delivered on March 23.Key observations:
- China has also warned it would take legal action at the WTO.
- I would not describe this trade dispute as a full-blown trade war at this stage, but it is certainly an opening salvo in what could become one.
- Early estimates put the negative impact on U.S. and global GDP growth around 0.1 percentage points of real GDP at most, so far.
- This trade dispute might not stay in the trade realm. China could retaliate financially, by reducing its purchases of U.S. Treasury bonds.