Last March, Donald Trump decided to drag age-old protectionism out of the past, imposing tariffs on US imports. Retaliation from China – the main target – followed; a solution may be on its way, yet, fears of a trade war resurfaced. A closer look point to mere trade skirmishes. Electronic, Electric, Machinery and Equipment and Automotive are the most at-risk industries according to our protectionism tracker.

When taken together, all measures would result in +0.5pp increase in China and US total import tariffs. This Trade Games scenario (highest likelihood) represents USD30bn per year of combined export losses for the US and China i.e. less than 0.1% of global trade of goods and services. For the US, expected impacts on growth, inflation, trade are negligible (+/-0.1pp max) as well as on business insolvencies (less than +1pp) but twin deficits could increase by -0.6 (trade) and -1.1pp (fiscal).

Alternative scenarios include a Trade Feud (trigger: +2.5pp in world import tariffs or a 15% tariff for all US imports from China) and a Trade War (+8.5pp of world import tariffs or a 45% tariff on all US imports from China). Both would be (very) disruptive for markets, global trade, business insolvencies, and growth in the US, the EU and China.

While less tweeted about, other forms of protectionism (Financial, Regulatory, Data, Currency, Environmental, Sanitary, Security, and Intellectual Property) could be even more disruptive.