Global recession a real possibility if US-China trade war intensifies, says Janus Henderson Investors

A further escalation of the trade war between the United States and China could drag the world economy into a recession, according to Janus Henderson Investors.

This is a potential for a “near-term, very painful escalation” of the trade tensions, which could weigh on the tech sector and slow global growth, said Richard Clode, a portfolio manager on the global technology team at Janus Henderson.

“I’m worried about the trade war,” Clode said at a media round table on disruption and sustainable investing in Hong Kong. “Rising protectionism, 25 per cent tariffs on Chinese goods is going to have huge implications for the global economy and could ultimately bring us into a recession.”

The world’s two largest economies have been engaged in a tit-for-tat battle over trade, sparked by US concerns over China’s industrial policies, including the forced sharing of technology.

The US has placed tariffs on US$250 billion of Chinese goods this year. On Monday, US President Donald Trump told The Wall Street Journal that it was “highly unlikely” that he would hold off on boosting tariffs to 25 per cent on US$200 billion of Chinese goods that are set to go into effect on January 1.

Market watchers have been hoping that a deal – or at least an easing of trade tensions – could be reached when Trump meets Chinese President Xi Jinping at the G20 summit in Buenos Aires this week.

But Clode said that the tensions are likely to “rumble on” past the G20 meeting and affect China’s tech sector.