All-Out Trade War Could Cost the Global Economy $800 Billion

Go inside the global economy with Stephanie Flanders in her new podcast, Stephanomics. Subscribe via Pocket Cast or iTunes.

The lesson of military history is that fighting a war on multiple fronts is not a good idea, but President Donald Trump is poised to open a second front in the trade war -- adding conflict with Mexico to the campaign against China. Bloomberg Economics has modeled a worst-case scenario of 25% tariffs on all U.S.-China trade and all U.S.-Mexico trade and also added in a 10% drop in global equity prices. In that all-out trade war, global GDP in 2021 would be lower by 0.8% -- equivalent to $800 billion -- relative to a no trade war scenario.