In the longer term, if this were to fester, this tariff war will lead to a more bifurcated world.
The US is the single biggest importer in the world, while China is its biggest seller of goods. (Source: File)
A full-scale trade war between the US and China is brewing, after American President Donald Trump threatened to impose tariffs of more than 100 per cent on Chinese goods imports from April 9. For the world, the impending slugfest between the world’s two biggest economies is indeed bad news, especially when there is already widespread upheaval in the trade world and analysts are upping the odds of an American recession .
Tariffs of over a 100 per cent on Chinese exports of goods by the US would essentially translate into a trade embargo, and could potentially set off an unmanaged decoupling of direct trade between the world’s two biggest economies. The US is the single biggest importer in the world, while China is its biggest seller of goods. An escalatory spiral in the trade war between the two, inextricably interlinked economies would, in the short term, bring back market volatility after a short breather of sorts.