US-China trade war to spark global recession

Rather than dying down, tensions between Washington and Beijing are only heating up. US President Donald Trump has raised tariffs on Chinese goods from 10% to 25%, but Beijing has not responded to the move so far. Nevertheless, Washington has suggested that China should reach a trade deal now if it wants to avoid more serious consequences. Economists fear that the standoff between the two countries will trigger a global recession, and a collapse of oil prices and stock markets, Nezavisimaya Gazeta writes. "For Russia, escalation of the trade war does not bode well. In the future, global recession will result in the collapse of commodity currencies, including the ruble," experts say.

Economists from Moody’s believe that the US-China trade war will have serious consequences for the United States, China and the entire global economy. In particular, the American economy could slip into a recession by late 2020, when the presidential election is scheduled. Experts note that Trump's tariff hike will actually harm American companies.

Director of the Analytical Department at Loko-Invest Kirill Tremasov said that half of the imports targeted by the rising tariffs accounts for materials and components used by American companies for domestic production. The sectors in the US, which will be mostly targeted by the hikes on tariffs on Chinese goods, will be construction, transport, telecommunications, machinery, computers and electronics, he said, citing Moody’s analysis.

Russian Presidential Aide Andrei Belousov believes that the mounting US tariffs on Chinese goods could lead to the weakening of the ruble. The major danger here is not the ruble's depreciation, but uncertainty in the Russian currency’s fluctuations.

Experts told the paper that by exerting pressure on China, Trump wants to demonstrate that he is a strong leader in the eyes of his voters. However, the failed talks would stonewall global trade and raise the risks of a global recession, triggering the collapse of stock markets, oil prices, and in the future commodity currencies, including the ruble, senior analyst at BCS Premier Sergei Suvorov said. By introducing new tariffs against China, Trump will set off a domino effect in global trade, expert at the Russian Institute for Strategic Studies Vyacheslav Kholodkov said. Following Washington's example, third countries may start raising tariffs against each other’s goods and take other restrictive measures.

Director of the Alpari think-tank Alexander Razyvayev warned that the world could face a crisis similar to that of 2008, which had been triggered by the collapse of the Lehman Brothers. The analyst did not rule out that oil prices could drop to $30-35 per barrel.

China USA