In the last 24 hours we have seen the US confirm that they are considering additional tariffs on products imported from the EU.
The EU estimates that these could amount to an additional $11bn worth of tariffs, the US is downplaying the figures.
We understand the US position, as a net importer from the EU and China, the US is literally ‘losing’ money and jobs. Add to this, tariffs on other goods already as part of the US/China trade war, particularly hurting Germany and Japan, as well as its main target, China, it means that it could be a three way ‘Clash of the Titans’.
China and US as the world’s two largest individual economies and the EU as the biggest trading bloc, represent around 50% of the globe's total GDP. If the US is going to wage trade war on its two biggest rivals then at 50% of global GDP, we are heading for some volatile times.
It will be interesting to see how the EU responds. Its head is buried in Brexit at the moment but it will no doubt approach the World Trade Organisation about the legality of such a move by the US and seek to confirm what actions and retaliatory tariffs it could reply with. A global trade war could now be unpreventable. Meanwhile, stock markets that kept driving upwards on positive sentiment, have fallen back a little on trade war nerves. Expect a ‘knock on the head with a big bump or nasty bruise’.