China trade war: United Nations warns of 'massive' impact of tariff hike

US-China trade war a boon for Europe, UN study says

"I don't think it would be productive to speculate on the outcome because we have a lot of work left to do".

The study also said that positive effect for some countries will likely be outweighed by the negative global effects.

Countries that are expected to benefit the most from the trade war are European Union members; the United Nations study indicates that exports in the bloc are likely to grow by $70 billion.

The U.S. originally meant to boost its tariff on Chinese goods from 10% to 25% on January 1st, but the two sides agreed to a 90-day delay as they worked to reach a trade deal.

The US and China are locked in a trade war since President Donald Trump imposed heavy tariffs on imported steel and aluminium items in March previous year, a move that sparked fears of a global trade war.

"We are now working on a new trade deal with China".

The world's two largest economies have 24 days left in a three-month truce in their trade war before United States duty rates are due to rise sharply - an escalation that economists say could be a powerful negative shock to the global economy.

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In a news conference, Coke-Hamilton quoted former U.S. Secretary of State Cordell Hull, who compared protective tariffs to "a gun that recoils on ourselves".

A senior Trump administration official said that through ongoing talks about the US' 142 trade demands, the number of items Beijing deemed non-negotiable has been sharply reduced, The Wall Street Journal reported on Tuesday. "If - barring an agreement between the US, China on March 1 - tariffs will escalate to 25 per cent, which is a significant difference from the 10 per cent as it now exists", Coke-Hamilton said.

The study indicates that European Union exports are those likely to increase the most, capturing about $70 billion of US-China bilateral trade ($50 billion of Chinese exports to the United States, and $20 billion of US exports to China).

"There'll be currency wars and devaluation, stagflation leading to job losses and higher unemployment and more importantly, the possibility of a contagion effect, or what we call a reactionary effect, leading to a cascade of other trade distortionary measures", Ms Coke-Hamilton said.

Although these figures do not represent a large slice of global trade - which was worth $17 trillion in 2017 - for some countries, like Mexico, the increase in exports will amount to a six per cent rise in exports overall.

A major concern, the report authors said, is the impact the trade dispute will have on a still-fragile global economy.

Beijing hit back with tariffs on $110bn of U.S. goods. "One major concern is the risk that trade tensions could spiral into currency wars, making dollar-denominated debt more hard to service", the report added. What comes of any deal will depend on the political will of future presidents to use the same tariffs Trump has employed to enforce it, the official said.

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