The article analyzes the profound impact of US-China tariffs, equating them to a trade embargo with severe economic repercussions. American exports to China are predicted to plummet significantly, while China's exports face a potential 75% decrease. This trade war could lead the US into a mild recession and destabilize its financial system. Both nations are under pressure, with China experiencing economic fragility. Although immediate diplomatic resolution seems unlikely, there are glimmers of hope for ongoing dialogue to mitigate the fallout from these rising tensions.
Sky-high tariffs that now hang heavily over US-China trade mean, effectively, that they have declared a trade embargo on each other, normally an act of war.
America's $150bn of exports to China will fall away quickly, while China's $440bn worth of exports to the US may drop by up to 75% over the next 18 months.
The consequences could tip the US into a mild recession this summer, and are undermining one of America's principal weapons, namely the power, leverage and reach of its financial system.
Trade negotiations would not be a panacea for the fundamental issues that divide these two powers, but they might buy some time and at least keep dialogue going.
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