International credit rating agency Fitch Ratings has stated in a report that increased trade tensions have raised the risk that new measures may be taken that would have a much greater impact on global economic growth than those enacted so far.
According to Fitch, the US administration's continuing focus on reducing bilateral trade deficits and the response by China, the EU, Canada and Mexico to existing measures, have increased tensions. So far the scale of tariffs imposed has been too small to materially affect Fitch’s forecasts for world growth. However, further measures mooted by the US would mark a significant escalation.
Accordingly, Fitch stated that if the US imposes a 25 percent auto tariffs and additional tariffs on China and trading partners retaliate symmetrically - in line with their recent responses to US steel tariffs - and NAFTA collapses, this scenario coupled with the existing measures would affect close to $2 trillion of global trade flows.
Meanwhile, London-based asset management company Pictet has issued a report on the effects of a potential trade war between China and the United States (US), stating that the effects of a trade war will extend far beyond the world's largest two economies. In some instances, open economies such as Taiwan, South Korea and Singapore in Asia and Hungary, the Czech Republic and Ireland in Europe could be more vulnerable than the US and China.