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What a full out trade war would cost the global economy

July 3, 2018

Via: CNBC

A full-blown trade war would punch a hole in global economic growth because of reduced trade volume, supply chain disruptions, and lost confidence.

Quantifying just how much damage an entrenched trade battle could wreak upon the international community is a trickier task, but J.P. Morgan has come up with three scenarios.

In J.P. Morgan’s first model, the U.S. is assumed to raise tariffs on all imports by 10 percentage points, with no retaliation. In the second, the U.S. action is met in equal fashion, with other countries that are the targets of U.S. tariffs imposing a 10-percentage-point increase in tariffs on imports from the U.S. In the third scenario, the entire world raises tariffs by 10 percentage points, a phenomenon J.P. Morgan calls a trade war.

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