What's really at stake here
One option from the US-China is that both sides lick their wounds and realize that there are no winners in the trade war and find a way to compromise, eventually getting a deal. That would mean a return to the greatest period of global growth in world history, one that's taken 1.2 billion people out of abjuect poverty since 1990. The pie has inarguably grown while US consumers have benefited from buying things at lower prices.
Alternatively, it could descend into a battle over who gets a few more crumbs from the pie. At the moment, it certainly looks like that's what is going to happen.
But if this fight really kicks off -- and it arguably has already -- then it's not going to end in a global slowdown or recession. It's going to end with a complete decoupling of China and the US.
What does that look like?
I hesitate to even contemplate it because there are so many offshoots. You can start with neither country trading with each other and entering an intelligency and military race. But what about the rest of the world? Does the US start leaning allies not to trade with China as well? How would China respond to that?
Ultimately you have two separate rival economies competing in separate spheres. Over a generation how much does that curb growth? I think 10% is a conservative estimate.
