A full-scale trade war between the US and China is looming, with President Donald Trump imposing tariffs of over 100% on Chinese goods imports. China has responded by increasing its own tariffs on American goods from 34% to 84%. This escalating conflict threatens to have far-reaching consequences for the global economy.
The two nations’ trade relationship is significant, with bilateral goods traded totaling $585 billion in 2024. However, the US runs a substantial trade deficit with China of $295 billion, equivalent to around 1% of the US economy. Analysts warn that a prolonged trade war could slow down growth, push countries into recession, and harm global investment.
The impact on other countries would be significant, as the US and China account for approximately 43% of global economic output. A trade war between these two nations could lead to job losses, reduced wages, and higher prices in many countries. The risk of “dumping” cheap products from China into foreign markets also exists, potentially threatening domestic producers.
The effects on global industries, such as steel, would be particularly concerning. With Chinese firms producing goods at below cost due to domestic subsidies, a trade war could lead to excess steel being redirected to other markets. This could harm workers and consumers in countries like the UK, where steel production is already under pressure.
Most economists agree that the consequences of an all-out US-China trade war would be highly negative, with widespread economic fallout affecting many nations. As the situation continues to unfold, it remains crucial for policymakers to consider the potential risks and seek a peaceful resolution to avoid devastating global economic consequences.
Source: https://www.bbc.com/news/articles/c4g2089vznzo