Mumbai, April 11 -- The escalating trade tensions between the United States and China pose a significant risk of a sharp contraction in bilateral trade, as per a statement by the WTO Director-General on escalating trade tensions. Our preliminary projections suggest that merchandise trade between these two economies could decrease by as much as 80%. This tit-for-tat approach between the world's two largest economies - whose bilateral trade accounts for roughly 3% of global trade - carries wider implications that could severely damage the global economic outlook. Our assessments, informed by the latest developments, highlight the substantial risks associated with further escalation.
The negative macroeconomic effects will not be confined to ...