The war of words between the United States and China has escalated rapidly over the last few days. On Thursday, US President Donald Trump upped the ante in the trade battle with China, suggesting further tariffs on $100 billion of imported goods from China, on top of the $50 billion announced on Tuesday.
An escalation of trade tensions represents a growing downside risk to our baseline global forecast as the US administration looks determined to reduce the US trade deficit and curb China's strategic ambitions stated in its "Made in China 2025" plan. With the US international trade data showing a rising trade deficit in February－the widest since 2008－and a cumulative deficit vis-à-vis China on the rise－the deficit was $65.2 billion year-to-date, up almost $11 billion than the same period in 2017－we (at Oxford Economics) fear trade tensions will escalate further in the coming weeks.
"It was nice to experience these little touches and understand what makes a wedding day so special for a Chinese couple. I was happy to be a part of that experience!" Bradley said.
The meeting called for improvement in the rule of law and promoting comprehensive legislation and legislative process in key areas, as well as deeper integration in military and civilian development.
If China responds to these $150 billion of threatened US tariffs in kind, the cumulative loss of GDP in 2018-19 could reach 0.3 percent in each economy with the US potentially loosing more than 300,000 jobs. Importantly though, these threatened tariffs will be subject to negotiation, and therefore shouldn't be considered as final.