A fierce global trade war would significantly hurt the economy of the United States, making households poorer and destroying jobs, while China would not suffer as much, according to a new report by the European Central Bank.
Stock and bond markets could also be hurt by a general loss of confidence in the economy, ECB economists said in research published Wednesday.
“An escalation of trade tensions could have significant adverse global effects” on US economic growth, the authors said.
One particular conclusion by the study was that the country starting the trade war would wind up worse off than before.
“Qualitatively, the results are unambiguous: an economy imposing a tariff which prompts retaliation by other countries is clearly worse off. Its living standards fall and jobs are lost,” the report said.
US President Donald Trump has imposed tariffs on imported steel and aluminum, and on a range of Chinese goods, carrying through on his…