US-China trade war biggest threat to global economy in 2019, research shows

Home News US-China trade war biggest threat to global economy in 2019, research shows

The US-China trade war poses the biggest current threat to the global economy, according to new research from the Economist Intelligence Unit.

The EIU put together a list of the top 10 risks the global economy is facing in 2019, and researchers said “the combination… is more wide-ranging and complex than at any point since the Great Recession”.

Topping the list is the chance that the trade conflict between the US and China could “morph into a full-blown global trade war”, and could also become a “technological arms race”.

We’ll tell you what’s true. You can form your own view.

From
15p
€0.18
$0.18
$0.27
a day, more exclusives, analysis and extras.

Markets were boosted on Monday with news that the threat of a US-China trade war might by avoided, after Donald Trump  agreed to extend a truce over $200bn (£153bn) worth of tariffs on Chinese goods over the weekend.

However, the EIU’s researcher’s noted that while this decision “will avoid an escalation in tensions for now, a full-blown trade war between the US and China remains a significant risk to the global economy, owing mainly to the fact such a deal will lack the necessary enforcement measures to ensure Chinese commitment to the structural reforms demanded by US negotiators”.

Shape
Created with Sketch.

These products may become more costly in the trade war

Show all 9

left
Created with Sketch.


right
Created with Sketch.

Shape
Created with Sketch.

These products may become more costly in the trade war

1/9

Orange Juice, which Florida is known for, may soon be subject to import tariffs

Getty Images

2/9

The EU lists ‘footwear with outer soles of rubber or of plastics and uppers of plastics’ amongst the goods that may soon be subject to import tariffs

Getty Images

3/9

Cosmetic products, such as US brands Maybelline, MAC and Avon, may soon be subject to import tariffs

Getty Images for Rebekka Ruetz

4/9

Jeans, the all-American trousers, are on the EU’s list of goods that may be subject to import tariffs

Getty Images

5/9

Bourbon whiskey is on the EU’s list of over 100 US products that may be subject to import tariffs

Getty Images

6/9

US peanut butter products are on the EU’s list of goods that may soon be subject to tariffs

Getty Images

7/9

US motorcycles, such as the Harley-Davidson, may soon be subject to import tariffs

Getty Images

8/9

Cranberry products, a major US crop export, may soon become more expensive

Getty Images

9/9

All tobacco products are on the EU’s list of US goods that may be subject to import tarifs

AFP/Getty Images

1/9

Orange Juice, which Florida is known for, may soon be subject to import tariffs

Getty Images

2/9

The EU lists ‘footwear with outer soles of rubber or of plastics and uppers of plastics’ amongst the goods that may soon be subject to import tariffs

Getty Images

3/9

Cosmetic products, such as US brands Maybelline, MAC and Avon, may soon be subject to import tariffs

Getty Images for Rebekka Ruetz

4/9

Jeans, the all-American trousers, are on the EU’s list of goods that may be subject to import tariffs

Getty Images

5/9

Bourbon whiskey is on the EU’s list of over 100 US products that may be subject to import tariffs

Getty Images

6/9

US peanut butter products are on the EU’s list of goods that may soon be subject to tariffs

Getty Images

7/9

US motorcycles, such as the Harley-Davidson, may soon be subject to import tariffs

Getty Images

8/9

Cranberry products, a major US crop export, may soon become more expensive

Getty Images

9/9

All tobacco products are on the EU’s list of US goods that may be subject to import tarifs

AFP/Getty Images

The second biggest risk identified by the EIU is the potential for the US’s corporate debt burden to turn a downturn into a recession, which would “greatly exacerbate a global slowdown”.

At number three is the threat of China suffering a “disorderly and prolonged economic slowdown”. “Given the growing dependence of Western manufacturers and retailers on demand in China and other emerging markets, a disorderly slump in Chinese growth would have a severe global impact – far more than would have been the case in earlier decades,” the report says.

A no-deal Brexit comes in at number seven, tied with an Italian banking crisis.

If the UK leaves the EU without an agreement in place, the EIU has forecast a “sharp depreciation in the value of the pound and a much sharper economic slowdown in the UK than we currently forecast”. The impact on UK and EU trade and investment is likely to “prove sizeable enough to dent global economic growth”.

Trump has dinner with Chinese President and reaches 90-day ‘ceasefire’ in trade dispute

“In light of rising geopolitical uncertainty, broadening economic headwinds and technological shifts in the security landscape, the risks facing the global economy are as wide-ranging and complex as they have been since the Great Recession,” said Nicholas Fitzroy, the EIU’s risk briefing director.

“Combining all three of these trends, a potential escalation in the US-China trade war is the primary threat to global growth, with the possibility that a number of other countries could be sucked into the conflict.”


We’ll tell you what’s true. You can form your own view.

At The Independent, no one tells us what to write. That’s why, in an era of political lies and Brexit bias, more readers are turning to an independent source. Subscribe from just 15p a day for extra exclusives, events and ebooks – all with no ads.

Subscribe now

Leave a Reply

Your email address will not be published.