In its latest report, the US-based Fitch ratings highlighted that the US-China trade war escalation could knock 0.4pp off the world GDP by 2020.
China’s growth rate would be reduced by 0.6pp, and US growth by 0.4pp, in 2020.
Global GDP growth would slow to 2.7% this year and 2.4% next year.
Imposition of tariffs on all imports from China being considered by the US administration would mark a significant escalation of trade tensions.
For China and the US, tariffs would feed to lower export volumes, higher import prices, with latter raising firms’ costs, reducing real wages
Export competitiveness in countries subject to tariffs would decline.
Import substitution would offset some of growth shock in countries imposing import tariffs.