global perspectives

Ending a trade war with a tweet

Ending a trade war with a tweet
Emma Cusworth - Head of Marketing Strategy

Emma Cusworth

Head of Marketing Strategy

The escalating trade war between the US and China can be solved “with a tweet” Chief Investment Strategist Salman Ahmed tells ITV political editor Robert Peston.

Salman recently shared his views on the mounting hostilities between the world’s two largest economies in a live panel discussion. The US and China have imposed tariffs of 25% on more than $50bn worth of exports, with the threat of another $200bn to come.

Salman notes the situation can be reversed “with a tweet”, in reference to US President Trump’s fondness for conducting international diplomacy via Twitter, but says it is China who may be forced to back down first.

He said: “China accepts changes have to be done in the way international trade is conducted but they will be far less inclined to make concessions given the very public way this spat is being conducted.

“This can all be reversed very quickly – all it needs is a tweet – but since China are going to get hit the most in the short term, they may be the first to make concessions.” 

While the impact of a fully-fledged trade war will undoubtedly have negative repercussions for the global economy, Salman remains confident that the probability of global recession in 2018 “is almost zero,” based on readings of economic indicators. 

However, the UK economy is at risk of a no-deal hard Brexit. The effects will most likely to limited to the UK, since it is not large enough to deliver a shock to the global economy. Salman believes the situation could be made worse by the fact the Bank of England has very little ‘firepower’ left, given that interest rates are close to zero.

“What will kill the UK economy is if the financial sector moves out as a result,” he said. “You won’t see it on the M20,” referring to news that government ministers are planning an emergency requisition of space for lorries, “but you will see it at Heathrow.” 


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