Calculating the Cost of a U.S.-China Trade War

The video discusses a Bloomberg Economics report on the economic costs of the trade war, focusing on various trade scenarios and their impact on global GDP. It highlights the potential risks to equity markets and the role of central banks in responding to economic changes. The discussion includes the effects of US tariffs on Chinese imports and the market's assumptions about future developments.

What is the estimated global GDP reduction in 2021 if the current US tariffs on Chinese imports remain?

• 0.9%

• 0.3%

• 1.0%

• 0.6%

How does the market currently perceive the risk of the trade war?

• As a major immediate threat

• As a risk that might be resolved

• As a minor issue

• As an opportunity for growth

What effect does uncertainty in trade policies have on investment decisions?

• Encourages more investments

• Boosts economic growth

• Has no effect

• Leads to indecision and potential slowdown

What is the expected response of central banks if economic growth starts to crumble due to trade tensions?

• Do nothing

• Implement policy stimulus

• Reduce tariffs

• Increase interest rates

What is the current policy space available for central banks in China and the US?

• Limited

• Extensive

• Unlimited

• None