US-China trade war will continue as costs to both sides are minimal, says Singapore economist

The US-China trade war will not end any time soon, because the cost to both sides is minimal and is roiling other economies more than anything else, a leading economist from Singapore’s Nanyang Technological University said on Thursday.

Professor Tan Kong Yam, who is also the co-director of the Asia Competitiveness Institute research centre at the Lee Kuan Yew School of Public Policy, showed data on how badly manufacturers across Europe, South Korea and Japan had suffered from tit-for-tat tariffs that Washington and Beijing had thrown at each other in the past year.

Tan said he expected the worst impact to be felt in 2021, with global growth dipping by 0.5 per cent. China’s GDP would contract by 0.8 per cent, while for the United States, it would be less than 0.6 per cent. Southeast Asian economies would be minimally affected, he said, though if China’s GDP decreased by 1 per cent, trade-dependent Singapore would see a corresponding 1.25 per cent dip.

He added US President Donald Trump also would not have any incentive to compromise on tariffs as long as it remained in his interest to prolong tensions, given that China’s growing influence and economic might had sparked wariness among Trump's main voting blocks.