U.S. Outlook: China trade fight takes center stage

Scott Anderson
Posted by Scott Anderson
Chief Economist

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.

Graph showing amount of U.S. steel imports, by countryChina 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.

 

Read my full report.

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