Vladimir Sedalishchev: “The confrontation between the US and China will cost the world economy a 1.2% drop in GDP”

According to the expert, the reasons voiced by the Trump administration for the trade war, such as the fight against drug trafficking or reducing the trade deficit, do not look convincing. «More likely, it is a fight for global leadership: in recent years, China has overtaken the US in terms of GDP in purchasing power parity (18% of the world economy), which is undoubtedly an extremely worrying signal for the States. Therefore, the 'now or never' argument could well be the true trigger of the global trade war launched by Trump," Vladimir Sedalishchev believes.

The expert assessed the possible consequences of the confrontation between the US and China. «Based on the tariffs currently imposed by the parties (104% for China and 84% for the US), I predict a 2.6% or $713 bn decline in US GDP, and a 2% or $351 bn decline in China’s GDP. For the world economy, this confrontation will cost 1.2% of GDP or $1.5 trillion, provided that the current tariff structure is maintained for at least a year," concluded Vladimir Sedalishchev.

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