Standard Chartered : The three main risks facing the global economy

US-China trade war - the potential impact

China's economic and political relationship with the US is the most important one in the world today. We believe that both sides want a 'win-win' solution to the trade dispute, which will result in even more trade and investment between the two economic powers.

Of course, such an outcome is by no means assured. We estimate that additional US tariffs of 25 per cent on USD50bn of Chinese goods could cause those exports to slump 40 per cent over 12 months, equating to roughly a 0.15 per cent decline in China's GDP.

The tariff impact would hurt other Asian countries in China's supply chain; we estimate that 1.8 per cent of Taiwan's exports could be affected by a US-China trade war, 1.2 per cent for Malaysia and Singapore, 1 per cent for Vietnam and 0.9 per cent for Korea.

However, some of these same countries might benefit from the US-China trade dispute by displacing China's exports to the US.