What's Changing? - Trade

Please see below key recent developments concerning trade:

See also:

October 2023

National climate policies are driving new trends of trade protectionism, with the EU at the centre of many of these fights. The EIU expects disputes between the EU and many developing nations to intensify over the 2020s given the inability of many emerging markets to meet the EU’s environmental policy thresholds. Protectionist concerns in the electric vehicle (EV) industry, as well as related sectors including critical materials, also threaten significant impediments to international trade.

September 2023

World trade volumes dropped 3.2% in July 2023 - the steepest decline in almost three years. High inflation slowed demand for exports, while the resulting interest rate hikes choked off credit, fuelling fears of a global economic slowdown.

February 2023

As flows of trade continued to morph, some historical manufacturing hubs started shifting away from China to countries like Vietnam and Mexico.

January 2023

Global trade continued to slow as the Ukraine conflict and its consequences replaced the pandemic as the leading drag on growth. Trade will grow at a slower average rate than GDP in the coming nine years, reversing the pattern of trade-led global growth that has prevailed in recent decades, warned BCG. Familiar trade patterns will shift, not only as a result of the war in Ukraine, but also owing to Western nations’ decreasing reliance on China trade and to the rise of economic blocs such as the Association of Southeast Asian Nations (ASEAN) as companies continue to diversify their supply chain risks.

December 2022

Trade compliance has become enormously complex and a significant source of corporate risk. In addition, CEOs need more expertise on how to navigate mounting geopolitical hazards and make their supply chains more resilient. The role of risk management in trading, therefore, needs to change rapidly, and it should command greater attention from top management. Many companies with large import and export footprints should consider having this function led by a senior executive - a “chief trade officer” - who reports directly to the C-suite, argued BCG.
The strength of large companies in global trade is largely a global trend. For example, looking at the US, Canada and EU, around 70% of the value of goods exports comes from larger companies. More small than large firms export, however the average size of exports per firm is far higher for large companies, being ten-times the amount of medium sized companies, and over fifty-times the size of small ones for the EU.
Further reading:
- A new corridor for India-Russia trade via Iran is almost ready - Quartz India

September 2022

the EIU noted that between 2000 and 2021 there was a threefold increase in the value of global merchandise trade, which reached a record high US$22bn by 2021. However, over this period deepening trade imbalances, rising protectionism and China’s unequal treatment of Chinese and Western companies have resulted in diplomatic rifts. US-China tensions in particular threatened to up-end international trading networks and the future of globalisation. Meanwhile, trade in other regions was influenced by external factors, such as commodity price shifts and foreign-exchange rate changes.

June 2022

Further reading:

April 2022

Russia’s invasion of Ukraine led to a new round of predictions that the end of globalisation was nigh, much as seen at the beginning of the pandemic. BlackRock CEO Larry Fink claimed that the war in Ukraine is accelerating the end of globalisation that has shaped the new world order for the last 30 years.
However, global cross-border flows rebounded strongly since the early part of the pandemic. HBR believes that the war will likely reduce many types of international business activity and cause some shifts in their geography, but it will not lead to a collapse of international flows. Wharton management professor Exequiel Hernandez agreed, believing it will take much more than a conflict between two countries to destroy the economic fundamentals of international trade.
The organisation of business activities into global value chains was a defining component of the significant advancements in globalisation witnessed in the three decades leading up to the recessions starting in 2008. In the years that followed the speed of global trade integration slowed down, and the COVID-19 pandemic exacerbated the uncertainty surrounding internationally fragmented production processes. More importantly, it made nation states keener to build up greater autonomy in the production of strategic goods, which resulted in notable increases in the scale of restrictive trade policies adopted by countries in the wake of the pandemic. Hence, the ‘new normal’ is likely to see a greater regionalisation of investment flows and may lead to some restructuring of existing value chains.

February 2022

Trade between Africa and China reached an all-time high of US$254 billion in 2021, up more than a third from the previous year, but most of the increase came from a jump in Chinese exports, which continued to dwarf Africa’s exports to China.

November 2021

Trade patterns remain under threat of sudden revulsion. Geopolitical risks and unexpected natural disasters can all alter their delicate balance. Climate change is also expected to have a huge impact on world trade. This has been highlighted since the pandemic radically reshaped the entire global trading network. Virus-mitigation lockdowns, labour shortages, slumping demand for some goods and rising demand for others all helped to tear up the trade map.

March 2021

The World Trade Organisation’s annual forecast for global trade, showed that trade flows shrank 9% in 2020.

January 2021

2020 will be remembered as a significant year in the world of global trade. Rocked by the shocks of a global pandemic, trade also continued to be an important expression for President Trump’s politics and a key forum for international geopolitics, with this having real and significant implications for both citizens and businesses internationally. For Chatham House, a Biden presidency suggests a less antagonistic and more cooperative approach to trade policy, but at the start of 2021 it was unclear whether there would be significant change in substance or just a change in style from the new administration, and also what this might mean for broader developments in global trade.
Global demand for Chinese goods has been so strong recently it’s creating a shortage of containers and driving up shipping costs, potentially impeding the nation’s exports in coming months. Exports have rising quickly since mid-2020, fuelled by pandemic-related purchases like medical masks and work-at-home equipment, including computers. Imports haven’t been growing at nearly the same pace, resulting in a lack of shipping containers returning to China to be refilled and sent out again.
China’s has a record-high trade surplus. Exports in December rose 18.1% year-on-year, while imports rose 6.5%, beating forecasts, reported Quartz.

August 2020

The COVID-19 pandemic delivered perhaps the greatest shocks to international trade since the Great Depression. Global trade in 2020 was projected to decline by 20% according to BCG's baseline scenario for economic recovery, and it was not projected to regain its 2019 absolute level of $18 trillion until 2023.
Global trade in goods is likely to have fallen by a record amount in the second quarter of 2020, the World Trade Organisation (WTO) said. The data comes from the WTO’s Goods Trade Barometer, a real-time gauge of trends in global trade. The current barometer reading of 84.5 is 15.5 points down on the baseline value of 100. It is the same level as was seen during the financial crash of 2008 to 2009, the WTO said. It is also in line with WTO data released in June, which foresaw an 18.5% drop in merchandise trade in the second quarter of the year as compared to the same period last year.

July 2020

Even before coronavirus hit, the limits of globalisation were becoming clearer. Trade as a share of global GDP peaked in 2008 and has trended lower ever since.
The COVID-19 pandemic has delivered perhaps the greatest shocks to international trade since the Great Depression. Global trade in 2020 is projected to decline by 20% according to BCG's baseline scenario for economic recovery, and it is not projected to regain its 2019 absolute level of $18 trillion until 2023. Only the most optimistic economic scenarios see trade returning to its previous level in 2021.
The future of global supply chains is an especially important question for China, the world's manufacturing powerhouse. Some countries and companies now worry about relying too much on any single supplier for consumer and medical goods, let alone one where the government hid the first evidence of what became a global pandemic and sometimes enforces trade and investment rules in seemingly arbitrary ways. The US-China trade war - and the vulnerabilities it reveals for manufacturers - certainly don't help, noted GZeroMedia.

June 2020

The pandemic could cause global foreign direct investment (FDI) to plunge by half over the next 2 years, falling below $1 trillion for the first time since 2005, according to a new report by the Conference on Trade and Development. As global investment flows dry up, developing economies are expected to be the hardest hit.

April 2020

At least 80 countries and territories enforced export restrictions on medical equipment such as face masks and ventilators in early 2020. This protectionist trend is threatening global supply chains and ramping up prices for much-needed gear, the World Trade Organisation warned.

January 2020

The “phase-one” deal suspending trade hostilities between America and China was signed in Washington. The agreement commits China to buy more American agricultural goods, among other things, in exchange for America withholding further tariffs. Most of the penalties that both sides have imposed on each other remain in place. Data this week showed that China’s global exports grew by 0.5% in dollar terms last year, the weakest rate in three years. Its exports to America fell by 12.5%. See Economist article.
After months of rollercoaster hype, the US and China readied to sign a so-called "phase one" trade deal that eases some tariffs on Chinese products. Meanwhile, Beijing committed to large scale purchases of some US goods and services. The preliminary deal would also address some of America's long-term concerns over intellectual property issues.
The Economist looked at the economic and political context of the trade deal that America and China signed on January 15th after three years of a bitter dispute. The “phase one” agreement trims tariffs and obliges China to buy more from American farmers. But, warned The Economist, do not be fooled. It is a modest accord that cannot disguise how the world’s central relationship is at its most perilous juncture since before Richard Nixon and Mao Zedong re-established links five decades ago.
The international trading system is increasingly a source of public disquiet across societies, with the implications for living standards, jobs and the environment areas of acute concern. In a research paper, Chatham House analysed the role of human rights impact assessments in shaping trade agreements.

December 2019

At the end of 2019, Washington and Beijing struck a deal to pause their costly trade war. The US held off on new tariffs and reduced levies on some other Chinese goods, and China promised to buy more US goods and protect intellectual property rights better. However, powerful political forces are continuing to push the two countries apart, politically, economically, and technologically - a process that's been called "decoupling".
After months of wrangling and rollercoaster hype, the US and China agreed on the terms of a so-called "phase one" trade deal. The US will roll back some existing tariffs on Chinese imports and postpone any new ones, in exchange for Beijing's promise to buy more US agriculture goods.

November 2019

International trade rules and policies are deeply relevant to environmental performance. On the one hand, trade flows, rules and policies can exacerbate environmental challenges as consumers regularly purchase goods produced or disposed of in unsustainable ways in other countries therefore 'exporting' environmental costs. On the other hand, trade rules and flows can be harnessed to support environmental agendas and impact commercial and trade prospects positively, according to Chatham House.

September 2019

The US announced huge tariffs on EU exports. The WTO granted the country permission to tax up to $7.5 billion of EU exports annually, including Scotch whisky and Spanish olive oil.

May 2019

In nominal terms, trade between the United States and Soviet Union in the late 1980s totaled $2 billion a year. Current trade between the United States and China is $2 billion a day.

March 2019

The US Commerce Department announced that, despite Trump's pledge to win a fairer deal on trade for American workers by imposing, or threatening to impose, tariffs on foreign-made goods, the US posted its highest-ever merchandise trade deficit ($891.2 billion) for 2018.

February 2019

Progress on US-China trade talks is occurring against a darker economic backdrop, warned The Economist.. Global manufacturing activity has slowed, a downturn that bears a striking resemblance to one in 2015 that was triggered by China’s efforts to wean its economy off credit. China should not matter so much, given that its financial links with the rest of the world remain modest. The problem is not so much that the headwinds from China are powerful, as that the rest of the world is poorly prepared to lean against them.

January 2019

Today’s trade tensions are compounding a shift that has been under way since the financial crisis in 2008-09. Cross-border investment, trade, bank loans and supply chains have all been shrinking or stagnating relative to world GDP. Globalisation has given way to a new era of sluggishness. Adapting a term coined by a Dutch writer, The Economist called it “slowbalisation”.
The coming year is shaping up to be one of preferential trade deals, where two or a group of countries agree on their own trading rules. As well as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which came into effect on Sunday, and an EU-Japan deal, America is aiming to strike several such accords. But do these act as stepping stones towards broader trade liberalisation? Or do they distort trade and divide the world into competing trade regions?
US and Chinese negotiators met for a third day to try to hash out a deal to end the trade war. Both sides have been hurt by tit-for-tat tariffs on $360 billion of cross-border trade. China’s economy is growing at its slowest clip since the global financial crisis, by some measures, while the US stock market experienced its worst December in over 80 years, noted GZEROMedia.
Representatives of 76 WTO members announced plans to negotiate new rules covering “trade-related aspects of electronic commerce”. The move has sparked controversy. It could reach deep into members’ domestic regulations to cover cybersecurity, and may affect the movement and storage of personal data. American companies, which rely on the free flow of data, would benefit the most from it. But it will be harder to get European negotiators, China and developing countries on board, warned The Economist.

December 2018

Donald Trump and Xi Jinping announced a truce in the US-Chinese trade war. China will increase its purchases of American farm produce, energy and some industrial goods. In exchange America will delay an escalation in tariffs from 10% to 25% on $200bn of goods, planned for January 1st 2019, until April 1st at the earliest. But because formal talks between the two countries could well fail, the truce is worryingly fragile, warned The Economist.
The Economist added that the view, once commonly heard in Beijing, that China could outlast America in a grinding tariff battle has given way to the realisation that, as the country with the huge trade surplus, it has more to lose upfront. Optimism that the government could fight on two fronts, taming its heavy debt burden at the same time as taking on America, has also cracked. So the swagger from a year ago is being replaced by more conciliatory messages as China tries to win over Donald Trump.
Further reading:
- China’s Christmas gifts are unlikely to ease trade war tension - FT

November 2018

The annual summit of Asia-Pacific Economic Co-operation, a club of 21 members, resulted in a failure to agree on a statement. Chinese officials objected to American-backed phrasing that called for members to fight protectionism and unfair trade practices, leaving smaller members to wonder where the superpower rivalry is heading and fret about the deepening trade fight between China and America.
At the cross-country level, there is a correlation between economic growth and rising international trade. Some of the most cited papers in this field (e.g. Frankel & Romer 1999 and Alcalá & Ciccone 2004) rely on long-run macroeconomic data and find evidence of a causal relationship: trade is one of the factors driving economic growth. noted Our World in Data.
Other important papers in this field have focused on microeconomic evidence, exploring the causal impact of specific trade liberalization policies on firm-level productivity within countries. These studies also find that trade liberalization has led to growth in the productivity of firms.2
From the late 1990s global trade grew explosively, and the gap between the rich world and the rest closed fast. However, convergence seems to be slowing today, warned The Economist. Real output per person is falling in Africa and Latin America compared with that in America. The effects could be particularly bleak in Africa, where the population has grown so rapidly that the number of poor people has increased. The path to development is getting steeper again, added the newspaper.
Chinese president Xi Jinping defended globalisation, and promised to do more to open the country’s economy at the start of a major trade expo in Shanghai.
Singapore said US-China trade tensions will hurt growth. The trade-dependent city-state announced 2.2% GDP growth for July-September from a year earlier, lower than forecast, and warned a trade war between the world’s two largest economies will weigh on its economy in 2019.
As a result of US-China trade tensions, the average tariff on US imports rose to around 3.2 percent. While that’s an increase of about 1.8 percentage points from last year, it’s roughly on par with levels seen in the early 1990s, It’s still a far cry from the 1930s, when the average US tariff was 20 percent, noted GZEROMedia.
Further reading:
- US-China trade war starts to drag on Asian growth - FT

October 2018

Donald Trump announced a new trade deal that is intended to replace NAFTA: the United States, Mexico and Canada Agreement. With the Canadians finally on board, the three countries’ leaders will sign the new pact by the end of November. The deal’s full impact will not be clear straight away, noted The Economist, but it should provide some certainty for businesses worried about NAFTA’s demise.
However “America First” is starting to hinder the global economy, warned Quartz. Trade wars and tax cut-related debt will cast a long shadow, according to the IMF.
Around 70 percent of U.S. firms operating in southern China are considering either delaying or ending investments there as trade tensions between Washington and Beijing grow, according to a new American Chamber of Commerce survey. Of these firms, only 1 percent say they have plans to establish new manufacturing bases in North America, noted GZEROMedia.
In just four years, China has launched naval vessels with a total tonnage greater than that of the entire French, German, Indian, Italian, South Korean, Spanish, or Taiwanese navies, according to the International Institute for Strategic Studies.
Further reading:
- Revamp global trade to match our new reality - FT

September 2018

President Donald Trump announced another wave of tariffs on as much as $189bn of Chinese imports. The Chinese promised to retaliate with duties on $60bn of American exports. The trade war could get bloodier still: reports have emerged that a Chinese official is considering re-imposing export restrictions on raw materials that American manufacturers depend on. If America does not stick to the rule book, others are less likely to, warned The Economist.
According to Capital Economics, a research firm, “The damage from the latest escalation of the trade conflict on China’s economy will be small—much less than 0.5 percent of GDP, even if policy is not loosened further.” If Beijing wants to pump money into the economy to boost growth, it can. It can also allow the value of its currency to drift lower to boost exports. Chinese officials say that’s not in their plans, but it’s a tool they can use if they need to. China can also redirect many exports away from the US toward other customers, noted GZEROMedia.
Chatham House addressed such key questions as: will the increased trading opportunities in non-tangible commodities such as data and services create new opportunities for global trade growth, will technologies such as blockchain be able to streamline trading processes or will regulatory barriers halt technological adoption and resultant trade volume, and will the rules governing trade be able to adapt?
There are negotiations afoot that could soon affect hundreds of billions of dollars in cross-border trade, noted GZEROMedia, and it’s got nothing to do with NAFTA or the escalating trade fight between the US and China. Officials from Washington and Brussels will sit down to review the state of the US-EU Privacy Shield, a data-sharing pact between the US and the European Union that underpins more than $260 billion of annual digital trade between the two regions.
Donald Trump announced fresh tariffs on another $200 billion of Chinese goods. A 10% duty will go into effect on Sept. 24 and jump to 25% by the end of the year. Thousands of Chinese imports will be affected, but some Apple products will be spared. If China retaliates, the president said he was prepared to tax another $267 billion of goods.
However GZEROMedia noted that industry organisations and consumer advocates have warned that these tariffs could cost jobs, reduce economic growth, and erode living standards, particularly for middle class and lower-income people, who tend to spend more of their income on imported goods. By one official estimate, cheaper imported goods account for more than a quarter of the American middle class’s purchasing power.
Chinese president Xi Jinping reiterated his commitment to trade reforms and building “an open world economy” ahead of a Forum on China-Africa Cooperation.
Japan’s trade deficit doubled. The increase recorded in August was driven by energy imports. Its surplus with the United States reduced sharply as it purchased more liquefied natural gas and dispatched more of its own exports to China, amid concern over Trump’s anti-import policies.
Further reading:

August 2018

Donald Trump said he has “no time frame” for ending the tariff war with Beijing, ahead of two days of talks between Chinese and US trade negotiators in Washington. Chinese foreign ministry spokesman Lu Kang, meanwhile, was hoping for a “good result” even as the two nations expanded their tariffs.
Japan and China’s finance ministers met in Beijing to revive talks of a massive currency swap worth 3 trillion yen ($27.15 billion).
Terminating NAFTA would cost North America’s three economies $99 billion in annual real GDP, according the Bank of International Settlements. The US stands to lose the most, $40 billion, followed by Canada and Mexico, $37 billion and $22 billion respectively.
The recently announced tariffs that the US is imposing on Mexico, the EU, and China are expected to affect companies across multiple industries, from food production to motor vehicles to construction and more. Executives around the world are discussing what the trade war means for their companie - CB Insights analysed what they're saying.
Figures released by the OECD report that a large repatriation of earnings by US parent companies has contributed to a substantial fall in global foreign direct investment (FDI) outflows. These figures show that in the first quarter of 2018 global outflows fell by 44% from $US242bn to $US136bn.

July 2018

Jean-Claude Juncker tried to ease trade-war tensions. The European Commission president visited the White House, where he lobbied for both sides to work out a plan to reduce tariffs. Trump reported that he felt “something very positive” would come of the meeting.
Economist George Magnus that the global consequences of a trade war may soon become much more serious. One major investment bank has suggested that in a more aggressive trade environment, the world economy could become as recessionary as it became after the Lehman crisis, with a hit to US and Chinese growth of between 2.25-2.5 per cent, and to the EU of about 1.5 per cent.
Will the increased trading opportunities in non-tangible commodities such as data and services create new opportunities for global trade growth, asked Chatham House? Will technologies such as blockchain be able to streamline trading processes or will regulatory barriers halt technological adoption and resultant trade volume? And will the rules governing trade be able to adapt?
The EU and Japan signed a major trade deal in Tokyo. Eliminating 99% of tariffs, it’s the largest trade deal ever negotiated by the European Union. Japan also had meetings with Trans-Pacific Agreement members, which could result in additional member states added. For EY, the importance of this deal lies in its coverage; one-third of the global economy, and 600m people. EU firms export $100bn in goods and services to Japan annually.
China issued a 1,300-word rebuttal to the latest US tariffs list…That followed the US saying it was considering tariffs on an additional $200 billion worth of Chinese imports, which Beijing said would “seriously worsen” the global trade environment and hurt multinationals and average customers around the world.
Meanwhile, added Quartz, Chinese exports accelerated in June, rising 11.3% from a year earlier and beating forecasts of a 10% increase. The commerce ministry said last month that exporters were front-loading shipments to the US to get ahead of expected tariffs.
China warned the US against its proposed extra tariffs on US$200 billion of goods, reported Quartz. The commerce ministry said the measures would be “completely unacceptable” and China would respond. US businesses in China fear Beijing’s threats could mean anything from consumer boycotts to stricter inspections to delays in deal approvals.
Since 1948, the WTO and its predecessor, the General Agreement on Tariffs and Trade, worked to increase the volume of global trade and create a level regulatory playing field that would limit unfair trade practices. However, recent movement in the international trade space has prompted some of the strongest proponents of multilateral trade agreements to become some of the prime movers against greater integration in the global trading system. Meanwhile, the rise of China has shifted the balance of global trade towards emerging markets. In light of these changes in the international trade arena, Chatham House asked how must global trade rules evolve to deal with new challenges - e.g. is the WTO still fit for purpose or is broader international reform needed?
According to EY, China and EU efforts to increase trade ties are part of a wider initiative to ensure that international trade isn’t disrupted due to the US administration’s trade policy direction. The EU and China have iterated that they want to ensure a multilateral trade approach continues across the world.
China said the US is “opening fire on the world” with its threatened tariffs. Beijing warned it will respond the instant the Trump administration’s tariffs on $34 billion of Chinese imports go into effect.
Direct Chinese investment into the US has fallen by more than 90 percent, to just $1.8 billion, in the first half of 2018 compared to the same period last year, according to the Rhodium Group.
As mentions of tariffs on earnings calls reached an all-time high, CB Insights analysed which companies are concerned by the looming trade war and which ones could benefit from it. (See also CB Insights' Public Company CEOs Have Never Talked About A Trade War As Much As They Did Last Quarter.)

June 2018

EY published a new report as part of ts European Attractiveness Survey series. The 17th and latest report explores the foreign direct investment (FDI) activity in Europe. It focuses on the reality of foreign investment in Europe in 2017, the game changers for foreign investments in 2018 and the perceptions of Europe’s future attractiveness. The findings reveal an inflection in the pace of FDI inflows, influenced by four powerful game changers remaking the European rulebook on cross-border investment.
According to Our World in Data, there are dozens of official sources of data on international trade, many of which do not agree with one another. Even if you focus on what seems to be the same indicator for the same year in the same country, discrepancies are large. For example, for China in 2010, the estimated total value of goods exports was $1.48 trillion according to World Bank Data, but it was $1.58 trillion according to WTO Data. That's a difference of about 7%, or a hundred billion US dollars.
China pumped money into its economy. China’s central bank announced that, starting July 5, it will reduce the amount of funds local banks need to hold by 0.5%. The move is expected to free up some 700 billion yuan ($107.6 billion) for national and local banks, as fears of a prolonged trade war with the US grow.
Globalists should learn the zen of trade, believes Quartz, arguing that too many free traders are focused on how they think the world should be, instead of how it is.
The rise of China has shifted the balance of global trade towards emerging markets, even after the failure of the Doha Development round has limited the buy-in of emerging markets to the global trade system, and the rise of trade in services has made regulation of non-tariff barriers a controversial frontier for international regulation. In light of these changes in the international trade arena, how must global trade rules evolve to deal with these new challenges? Is the WTO still fit for purpose or is broader international reform needed, asked Chatham House?

May 2018

The US can eliminate its trade deficit or run the world’s dominant currency - but not both, argued Quartz, as America provides the rest of the world with liquidity and a safe place to store assets.
Trade between the US and China is the most unbalanced it’s been in decades, warned GZEROMedia. In key industries, Chinese firms have matched or even surpassed their US competitors. The Chinese government is also dead set on dominating industries that it sees as crucial to winning the future, like advanced manufacturing and artificial intelligence. For many in the US government, China’s growing technology prowess doesn’t just undermine American industry, it’s a threat to national security.

April 2018

The EIU expects the ongoing trade dispute between China and the US to escalate further in 2018, threatening the strong global economic performance seen recently. The dispute, which intensified in late March 2018, has the potential to cause significant economic pain to both sides. Despite ongoing negotiations, the positions of the two parties are entrenched, and the EIU expects bilateral economic tensions to persist, resulting in some of the tariffs proposed by the two countries coming into effect.
The US-China trade dispute is set to worsen in the coming months. The Economist Intelligence Unit expects both sides to enact a second round of tariff increases that will affect a total of around US$80bn in bilateral trade. However, a threatened third round of tariffs is less likely to be introduced. This means that the dispute will stop short of mutating into an outright "trade war" that would have damaging, spillover effects for the global economy. Nevertheless, bilateral economic tensions will persist, and will increasingly shift to non-tariff barriers.
China’s vulnerability on trade is not what it was. In 2006, Chinese trade amounted to 65.2 percent of GDP. In 2016, that number had fallen to just 37 percent. That’s still higher than the US (27 percent), but China now has less reason to shy away from a trade fight if its government feels it must persuade Trump that trade wars aren’t “easy to win.”
Shaping Tomorrow highlighted fears of a global trade war that are rattling stock markets around the world after President Trump threatened to impose tariffs on China and Xi threatened to respond in kind.

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