ORLANDO, Florida, June 28 - The only"winner" from a possible all-out trade war between the West and China will probably be the U.S. dollar.
These include the relatively closed nature of the economy, the global importance of U.S. equity and bond markets, and the ubiquity of the dollar in international reserves. They found that a rise in trade policy uncertainty to 2018-2019 levels would likely lower U.S. GDP growth by three-tenths of a percentage point. The estimated hit to euro zone growth would be three times greater.
U.S. exports of goods and services accounted for 11.8% of GDP in 2022, according to the World Bank, compared with 20.7% in China. Eurostat data shows that euro zone goods exports last year were worth 20% of GDP. China's domestic economic problems and geopolitical stance are enough to make foreigners wary of investing in the country. But it's no coincidence that foreign direct investment flows into China are plunging at their fastest pace in 15 years right as trade tensions percolate again.
The euro zone imports more goods from China than anywhere else in the world, and the yuan's weighting in the trade-weighted euro rivals that of the dollar. Trade tensions between China and Europe will hit the euro hard.