A trade war between the U. S. and China probably would take a bite out of the world’s two-largest economies but wouldn’t do enough damage to pitch either into recession, provided it’s contained.
A trade war between the U. S. and China probably would take a bite out of the world’s two-largest economies but wouldn’t do enough damage to pitch either into recession, provided it’s contained.
The nations would suffer a material reduction in output from the disruption in trade and higher prices that would result from a tariff battle, economists say. The damage could be compounded if the back-and-forth moves trigger a confidence-sapping swoon in global stock markets.
Yet even with all that, the betting is that both economies are strong enough to take the hit and keep on growing soundly — unless the clash spirals out of control to include an ever widening range of products, increasingly higher import levies and a complete collapse of equity prices.
“A trade war lite between the U. S. and China does meaningful damage but doesn’t trigger a recession in either country,” said Mark Zandi, chief economist at Moody’s Analytics Inc., in West Chester, Pennsylvania.
President Donald Trump plans to impose tariffs worth as much as $60 billion on Chinese products as early as this week to punish Beijing for what the U. S. perceives as intellectual-property theft from American businesses, according to two people familiar with the matter.
The administration is said to be considering wide-ranging levies on everything from consumer electronics to shoes and clothing made in China, as well as restrictions on Chinese investments in the U. S. Relax Tensions
China has sought to play down the possibility of a confrontation with the U. S. although the Wall Street Journal reported on Wednesday that Beijing is preparing to hit back with tit-for-tat tariffs. Speaking Tuesday at the end of the annual National People’s Congress, Premier Li Keqiang said that the government plans to further open the manufacturing sector to competition and won’t force foreign companies to transfer technology to domestic ones while doing so.
“We don’t want to see a trade war,” Li said.
