Martin Beck, senior economist at Oxford Economics, considers how a slowdown in US and Chinese economic growth caused by a trade war would affect the UK, and whether the current trade deficit means the domestic market is insulated from the risks
Amid the focus in the UK on the risk of potential post-Brexit trade barriers with the EU, it is easy to overlook the fact that actual barriers on commerce are steadily being raised between the US and China, the world’s largest and second largest economies respectively.
September 2018 saw the latest stage in this development, with the US imposing additional tariffs on $200bn (£151bn) of imports from China, building on the extra 25% duty charged on $50bn of imports in July and August. The result is that about half of all Chinese sales to the US are now subject to higher tariffs.
China has retaliated with extra duties on US imports which came into effect towards the end of September. These apply to a total of $110bn of purchases from the US, covering most goods imported from the US annually ($130bn in 2017).
