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The escalation of the U.S.-China trade fight — and the threat of further tit-for-tat measures — marks a significant risk to both countries and the world economy, analysts said.

The U.S. early Friday increased tariffs on $200 billion of Chinese goods to 25% from 10% and President Donald Trump threatened to extend levies to other goods from the country in an attempt to ratchet up pressure on Beijing as trade negotiations continue[1]. Beijing has said it would retaliate.

Trump Today: President touts ‘beautiful letter’ from Chinese leader Xi [2]

“No one wins trade wars, not even the bystanders,” wrote Gregory Daco, chief U.S. economist at Oxford Economics, a research firm, in a Thursday note....

Oxford Economics
Daco updated his outlook for the U.S., Chinese and global economies, estimating that the move to hike tariffs to 25% from 10% on half of U.S. imports from China — with China raising 8% tariffs on $60 billion of U.S. imports to 25% — would reduce U.S. gross domestic product by 0.3% in 2020, while curbing China’s output by 0.8% (see chart above). See: The group losing faith in a quick China trade resolution? The farmers drained by lost exports[3] That translates to a cost to the U.S. economy of around $29 billion by 2020, and a hit to the global economy of 0.3% or more than $105 billion. Read: Trump’s comments apparently emboldened China to take harder line on trade talks[4] Global stocks pulled back this week as previous confidence that Washington and Beijing would soon complete a trade deal was shattered by U.S. threats to follow through with tariff hikes

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