The United States would have most to lose if it started a trade war with other countries, while China would be better off after retaliating, according to a recent study by the European Central Bank (ECB) in Frankfurt. The study suggested the United States would bear the brunt of diminished trade and of damage to consumer and investor confidence.
The theoretical study that not replicate actual trade conditions simulated a 10 per cent US tariff on all imports and an equivalent retaliation from other countries.The United States would have most to lose if it started a trade war with other countries, while China would be better off after retaliating, according to a recent study by the European Central Bank (ECB) in Frankfurt. The study suggested the United States would bear the brunt of diminished trade and of damage to consumer and investor confidence.#
US growth would be cut by more than 2 percentage points, the ECB estimates. By contrast, China would gain by exporting more to countries where US goods are subject to tariffs, although that slight gain would be temporary and partly offset by a negative effect on confidence, global news wires reported citing the study.
Global trade, meanwhile, could fall by up to 3 percent relative to the baseline. (DS)
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