Jonathan Ernst | Reuters
President Donald Trump and China’s President Xi Jinping leave after an opera performance at the Forbidden City in Beijing, China, November 8, 2017.
The prospect of a full blown trade war between the United States and China — the world’s two biggest economies — sounds scary for sure, but experts say there is little to fear so long as any tit-for-tat doesn’t dramatically escalate.
On Friday, the White House is expected to unveil a revised list of between 800 and 900 products from China it will impose tariffs on. It could be worth $50 billion worth of goods, according to Reuters.
China has tried to appease Trump with offers to increase purchases of American products and the two sides have exchanged multiple visits of high-ranking officials in attempts to find common ground through negotiations, so far with little effect.
Economists and investors are watching developments closely but are mostly discounting the impact of the threat of tariffs, saying they will have a small impact as long as cool heads ultimately prevail.
“I think it’s so-called noise,” Frank C.H. Lee, senior investment strategist at DBS Bank in Hong Kong, told CNBC on Friday, stressing that the tariffs are a small percentage of the global giants’ overall annual bilateral trade volume of more than $5 trillion.
China said its economy grew 6.8 percent in the three months to the end of March, beating economist expectations, and maintained the same rate of expansion for the third straight quarter.
Lee said that tariffs, even bigger than those proposed so far, might slow China’s growth to as low as 6.6 percent, hardly a major blow to the world’s second-largest economy.
“The figure is not important,” he said of the tariffs, focusing instead on what he called the communication between the two sides and the frequent dialogue that has been carried out even amid the acrimony.