The world’s two largest economies, the US and China, have been engaged in a fast-paced trade dispute ever since Donald Trump first imposed punitive tariffs on goods from China last June. Economists have warned the trade conflict could permanently damage world trade if the spat continues. Commerzbank chief economist Jörn Krämer said: “The golden years of globalisation are over.”
The US imposed tariffs on billions of dollars worth of Chinese products last year, with Beijing retaliating in kind.
After months of hostilities, both countries agree to halt new trade tariffs in December to allow for talks.
But optimism surrounding the prospect of a deal soon disappeared, as the US more than doubled tariffs on $200billion worth of Chinese products last month.
Beijing similarly hiked tariffs on $60billion of US goods.
Mr Krämer has warned the ongoing trade war “threatens to disintegrate over the years”, adding: “All of these risks have settled on the global economy like mildew”.
Germany’s chief economist, Carsten Brzeski agrees, and said: “The tensions between the US and China have significantly accelerated the downturn of the global economy.”
Another economist describes the trade conflict as a “massive global brake on growth”.
The President of the German Institute for Economic Research, Marcel Fratzscher, added: “The economic conflicts in the US create enormous insecurity, which is poison for every company.”
The main issue with the ongoing US-China trade war is the uncertainty it is causing across the globe, which in turn puts a strain on the economy.
The International Monetary Fund warned last year a full-blown trade war would weaken the global economy.
They said a trade war risks making the world a “poorer and more dangerous place”.
But Dekabank economist Ulrich Kater warns the “biggest losers worldwide are consumers”.
He said: “If prices for goods and services rise and some offers are no longer available at all, then that will end up affecting private households in all countries.”
Additional reporting by Monika Pallenberg