President Trump has threatened to hit back hard if China doesn’t back away from the trade restrictions it announced last week. This latest dispute could still blow over if cool heads prevail – a planned meeting between Trump and Xi at the APEC summit later this month may provide an off-ramp. But there is clearly a risk that both sides may dig in their heels, expecting their opponent to fold first. While China’s economy has proven more resilient in the face of US tariffs than many had feared, there is still significant potential downside from a deeper rift with the US.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services