It is really difficult to assess in advance the effects of the trade war that has started. It certainly implies the need to restructure and reorganise the conduct of international business, especially the US corporation. The aftermath of a very high level of uncertainty for business will certainly be a recession or (less frequently) a weakening of growth in most countries of the world. The trade war between the United States of America and the People's Republic of China will also ultimately show whether the seller/manufacturer or the buyer/consumer is more important (the US authorities claim, in numerous recent media statements, that the consumer has the upper hand).

The escalating U.S.-China trade conflict, with China hiking tariffs to 84% and the U.S. recently retaliating with a fresh 125% tariff, disrupts $585 billion in trade. This drives up costs, inflates consumer prices, and strains global supply chains. Experts warn of a 0.3-0.8% hit to global GDP, with a 60% recession risk by late 2025. China’s “fight to the end” stance and export curbs on critical materials add pressure, while the U.S. aims to reshape its industrial base at a steep short-term cost. The world economy faces instability and slower growth as a result.

By imposing very high tariffs on China and many other countries, President Trump has started a 'tariff war'. The other countries will impose retaliatory tariffs back onto the USA. This will increase prices significantly which will cause high inflation. The Federal Reserve will react by lowering interest rates. The end result will be a Recession in the United States. The recession will slowly spread to the rest of the world.

However, we shouldn't forget that President Trump has an Economics degree. He knows how the economy works. But more importantly, he is an expert negotiator. He was an extremely successful real estate developer in New York city and around the world. Negotiations is one of his strengths.

Therefore, if he can force the other countries to 'negotiate' trade agreements, we might be able to avoid a Recession. Only time will tell us what happens.

From a economic perspective, this US-China tariff war represents a classic prisoner's dilemma with significant negative-sum outcomes. Historical data from similar trade conflicts suggests an initial 0.5-1.2% global GDP contraction is likely.

The economic decoupling will accelerate existing trends toward supply chain diversification, creating regional economic blocs rather than true autarchy. Game theory predicts both nations will eventually reach a new equilibrium after substantial mutual damage.

Evidence from comparable economic shocks indicates three distinct phases will emerge: acute disruption (6-18 months), adaptive reorganization (2-4 years), and new structural equilibrium. Developing economies with manufacturing capacity may experience accelerated growth during phase two as production relocates.

The global financial system's interconnectedness means contagion effects will spread beyond direct trade impacts, likely triggering monetary policy responses across multiple central banks to stabilize markets.

I do believe there is an opportunity for other countries to take advantage of this situation and use it at full potential. Countries who will do that will make a lot of money.

A U.S.-China trade war would likely slow global economic growth, increase uncertainty in financial markets, disrupt global supply chains, raise costs for consumers and producers worldwide, and particularly impact export-dependent economies and multinational corporations operating across borders.