Trade wars

Could doomsday be nearing as US-China trade war heats up?

The economic conflict that has been simmering between the US and China has entered a new and dangerous phase. Without question, the world is closer to a full-blown trade war than it has been since the 1930s.

The issue now is whether the two sides can step back from the brink. So far, financial markets think the standoff is akin to the Cuban missile crisis of October 1962, the closest the US and the Soviet Union came to nuclear conflict during the cold war.

Seen this way, Donald Trump is John F Kennedy, Xi Jinping is Nikita Khrushchev and the goods that have just left Chinese ports on their way to the US are the Soviet missiles en route to Cuba.

That Trump’s decision to increase tariffs from 10% to 25% on $200bn (£154bn) of goods only applies to items leaving China after the measure was announced just reinforces the historical parallel. As there was time for Khrushchev to back down, so there is time for Washington and Beijing to do a deal while the ships are crossing the Pacific.