PARIS (Reuters) - The United States and China have in the coming week what may be their last chance to broker a ceasefire in an increasingly dangerous trade war when their presidents meet in Buenos Aires.
With global growth increasingly suffering from frictions between the two biggest economies, tensions will come to a head when Donald Trump and Xi Jingping meet on the sidelines of a G20 summit in Argentina.
Washington is set to raise tariffs on $200 billion worth of Chinese imports to 25 percent from 10 percent in January if there is no agreement.
“We are optimistic about the summit as an opportunity to avoid further escalation, but not to pull back already announced tariffs,” UBS economists wrote in a research note.
They said that time was simply running out before the end of the year to come up with a different tariff schedule.
Washington accuses Beijing of not playing fairly on trade while China says the United States is being protectionist.
“If no deal is reached, investors should come to realize that tariffs are no longer a bargaining chip to bring China to the negotiation table,” Daiwa Capital Markets analyst Kevin Lai wrote in a research note.
“Rather, tariffs are becoming part of a longer-term strategy to unplug China from globalization, contain its economic power (and hence its soft and hard power altogether) and give the US greater strategic advantage,” he added.
The OECD warned this week that a full-blown trade war between China and the United States could knock global growth 0.8 percent lower by 2021, and even more for the
