US-China trade war heating up


The sudden imposition of a higher tariff on much of US imports from China, and the threat of more to come, represents another serious escalation of the conflict and an increase of downside growth risks for China, the US and the global economy. Financial markets have suffered, and the world is nervously waiting for any progress on the US-China negotiations.

Despite great uncertainties, Societe Generale economists still believe that a benign scenario remains the most likely, albeit by a narrow margin (55%). This would mean that a deal can be found within 1-2 months and tariffs would fairly speedily reduced. But the contentious issues are complex and difficult. A lot of heavily lifting remains to be done.

With rising protectionist measures, damage to economic growth is increasing. If current US measures and those likely to be taken by China remain in place, GDP can be expected to be hit to the tune of 0.5% in China, 0.25% in the US, and 0.15% globally. If the US levies tariffs on all Chinese goods, and China retaliates, these losses could easily double. Confidence effects and financial market reactions also argue for a downside balance of risks.

In the Global Thematic Report“US-China trade war heating up, but truce still most likely outcome”, the bank’s economists analyse the likelihood of a deal and estimate the potential impact on the global economy.


Societe Generale Cross-Asset Research is composed of more than 200 Analysts, Strategists, Economists and Quant, combining their expertise into ‘Research-based’ and innovative solutions suited to client’ needs: fundamental studies and expert views, investment ideas and long-term strategies, trade ideas and tactical baskets, thematic and systematic indices, quant solutions. On top of its established UK and Western European base, Societe Generale Cross-Asset Research benefits from a global coverage thanks to its presence in the US and in Asia (Hong Kong, Singapore, Tokyo and Bangalore) and Societe Generale local networks in Eastern Europe.


This editorial contains financial analysis which reflects the opinion of the Cross-Asset Research department of Societe Generale at the date of its publication. It does not necessarily reflect the views of the other departments of Societe Generale nor the official opinion of Societe Generale. This interview is dedicated to institutional and professional investors and is not deemed to be seen and used by retail investors for investment purpose. The viewers shall consult their own financial advisers to make their own appraisal.