ECB says looming trade war could derail global economic recovery

A significant increase in tariffs from US President Donald Trump could derail international trade, the European Central Bank (ECB) said today.

In an economic bulletin released this morning, the ECB said that while the tariffs announced by Trump have only had a modest impact on the global economy, an escalation of trade tensions could have a much more damaging effect.

Titled Implications of rising trade tensions for the global economy the study examined the liberalization of international trade over the last 60 years, and found that trade has slowed considerably since 2012.

If the US President carries out his proposed sanctions, the ECB predicts that the impact on an already slowing international trade could be significant.

“In a scenario in which the US increases tariffs markedly on imported goods from all trading partners that retaliate symmetrically against it, the outcome for the world economy would be clearly negative,” said the ECB.

The European governing bank found that global trade and activity could fall considerably, and that the United States would be severely affected, as would countries like the UK which have a close trade relationship with the US.

Only a small number of countries which dont have a strong trade relationship with the US would escape the effects of an all-out trade war.

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CityAM

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