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Recession on the horizon if trade war US-China escalates

Will China-US trade war create a recession?

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Experts all agree: if the trade war between China and the United States goes on, the world will undergo an unprecedented recession. 

Gary Shapiro, the CEO of the most famous high-tech show CES and president of the Consumer Technology Association said that that imposing an additional $300 billion worth of Chinese goods could simply lead to a so-called “Trump recession”

Shapiro called tariffs an “economic fence around the United States” that could “hurt consumers and American companies”

Moreover, Oxford Economics published a report predicting that there is a 45% chance Canada will enter in recession within the next 12 months as result of the US-China trade war. 

IT at the front row

Gary Shapiro is a well respected business man. Not only he is the CEO of the biggest high-tech show in the world, the Consumers Electronics Show – also known as CES,  but he is also the president of the Consumer Technology Association, that supervises all kind of projects of innovation in the United States.

For the past few years, the CES has been establishing local versions throughout the world, from Tel Aviv to Shanghai.

Speaking at the Chinese conference this week, Shapiro said the tariffs were “restrictive measures in the tech space and could escalate out of control and cause both consumers and U.S. chip companies to be trampled”, as MSNC reported.

Read on Alvexo: “U.S. Tech Giants Cut Ties with Huawei”

To many, Huawei was too much

Two weeks ago, the U.S Chamber of commerce published a list of Chinese companies that are now considered “at risk” by the administration. According to experts, Huawei being part of that list was what infuriated many countries and could cause a major financial collapse across the globe.

“The blacklisting of Huawei will not only push China to become more closed off to the rest of the world, but will also hinder the United States’ ability to maintain world leadership in the technology market”, Shapiro told CNBC.

Shapiro also shared some business advice by saying that if the United States want to “be innovative and maintain world leadership, we have to be out there in the world marketplace,” he added.

Not only this decision could affect the American economy, but it could severely hinder its neighbors, such as Canada.

Canada, a potential collateral damage

According to a recent study published by Oxford Economics, there is a 45% chance that the country would be in recession within the next 12 months.

Brett House, the deputy chief economist of Bank of Nova Scotia told Yahoo Canada that it was not too far from reality: “That’s not a bold call: that’s a call that simply reflects what rates markets are saying. It’s following the market”.

As the Canadian economical growth is described as in the “danger zone” in the report, it seems that the Trump administration is receiving increasing warnings to limit Chinese tariffs.

In a statement published yesterday, Donald Trump replied that he was “not afraid” of a trade war with China.

playbook 2019

 

Note: The opinions expressed in this article are the author's own and do not necessarily reflect the view of Alvexo on the matter.