What are the effects of US-China trade war to the whole world?

Though, looking forward to the G-20 summit it was expected to see the end of the trade war between U.S. and China. However, it looks more likely that the war on trade between these two countries will not be ended soon rather it would be very long, messy-and expensive for both as well as the global economy.

The costs of that war have not been only paying by these two major economically powerful countries but a big numbers of the countries that involve in trade with either U.S. or China.

In Europe, the direct effects of the US- China trade friction will be felt in sectors with medium to high technological contents like transport equipments, motor vehicles, rubber and plastics, chemical and pharmaceuticals.

The indirect effects in Europe could be more detrimental, not least because it is increasingly dependent on trade, not like China, but much more dependent than the US.

The tariffs that the U.S. and China have started covering a wide range of products, with most focused on manufacturing sector (see below). This time the U.S. extended tariffs to consumer products, so households will suffer higher prices and have already been suffering at the malls, markets, and the U.S. farmer- the poster child when it comes to trade war- will take yet another blow to his bottom line.

Countries’ output exposed to China’s exports to the U.S. and to U.S. exports to China. Analyst shows the worst blows from a drop in China’s exports to the U.S. would fall on Taiwan, South Korea and Malaysia—all embedded in Asia’s export supply chain. About 1.6% of Taiwan’s output is tied up in China’s exports to the U.S, with computers and electronics accounting for the largest share. For South Korea and Malaysia, those numbers are 0.8% and 0.7%, with the same industries in the crosshairs.

Bloomberg economist Dan Hanson and Tom Orlik have mapped out the main scenarios of the consequences of the trade war that would hurt global economy. “If tariffs expand to cover all the bilateral goods, and market slumls in response, global GDP will take a $600 billion. hit in 2021, the year of peak impact.

Graph: GDP of the world economy has fallen down due to the trade war continue to increase.

Plugging in 25% tariffs on all bilateral trade the model shows output declines of 0.8%, 0.5%, 0.5% for China, the US and the world respectively in mid 2021.

Trump also called on American companies to stop investing or manufacturing products in China, including relocating operations back to the U.S. “We don’t need China and, frankly, would be far better off without them.”

The president’s latest attacks alarmed the nation’s largest business group.

The U.S. Chamber of Commerce reiterated its long-standing concerns about China’s unfair trade practices,” but it called the U.S.-China trade relationship “for the most part productive” and urged the White House to tamp down the tensions that have been going to be more detrimental to not only the U.S. and China, the whole world economy as well