The economist assessed the risks of a trade war between the United States and China for the global economy

The statements of the International Monetary Fund about significant downside risks to global economic growth due to the aggravation of US-China relations should not be overestimated. This opinion was expressed by Alexey Zubets, Director of the Institute of Socio-Economic Research at the Financial University under the Government of the Russian Federation, in an interview with Izvestia on October 17.

According to him, a real trade war between the two economic giants is unlikely, as it will damage both sides.

"I don't see any serious threats from this trade war, simply because there won't be any trade war. Because Americans cannot do without supplies from China, and it is important for the Chinese to preserve the American market. Well, as a result, some kind of compromise will be found and the volume of trade between them will remain at a fairly high level," the expert said.

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Beijing's export controls on rare earth metals have provoked a strong reaction in Washington.

Moreover, the imposition of high tariffs would lead to a sharp increase in inflation in the United States, which would create political problems for the administration.

Zubets noted that in the event of a hypothetical trade war, all participants in the global economy would suffer, but in different ways. China, as the largest buyer of raw materials, would reduce imports of oil, metals and other goods, which would lead to a drop in prices on commodity markets.

"If Trump imposes 100% tariffs on supplies to America and China tomorrow, he will simply shut down his car industry. <...> The cessation of supplies from China will lead to the fact that prices in America will start to rise. Well, why would Trump create inflation out of the blue? To sort it all out later? To then lose power because Americans would be offended by him, that he led to inflation in the country?" explained Zubets.

For the American economy, the main risk would be an outflow of capital from financial markets, as investors would begin to transfer funds from dollar assets to other instruments.

Despite the existing confrontation, the expert expects a compromise to be reached between Washington and Beijing, which will keep the volume of mutual trade at a fairly high level.

On October 10, Trump announced the United States' readiness to impose increased duties on goods from China in response to Beijing's decision to restrict exports of rare earths. According to the American leader, China is "holding the world hostage" by creating a monopoly on the market of magnets and other metals. He promised to take financial measures.

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