Trade war fractures Asian global value chains Jayant Menon

Smoot-Hawley redux? 

Tariffs and trade wars have knock-on effects. It's impossible to tell that this point where this is all leading, but one thing is sure, the status quo ante is dead. What will emerge is uncertain.

The presumption in the US that things will get better. This is yet to be determined and it isn't possible to  know from the data. In addition, the policy is in constant flux. 

As a result, expectations are becoming more and more subject to "animal spirits," and less and less rationally based. This means one thing for markets and another for corporate planning. 

Markets are already responding negatively to increasing uncertainty. "Recession" is the world of the day, even though the economic data do not yet support this view decidedly. 

US finance and business are also getting rattled and asking the president to tone it down and dial at least some of it back. No evidence he is hearing it yet.

Sensitive to history and humiliation, China is digging in for the long haul. Are Americans? And what about Europe, which is also in the administration's cross hairs as a competitor trading bloc, while also being affected by the trade war with China and sanctions on Russia and Iran.

Asian Correspondent
Trade war fractures Asian global value chains

Jayant Menon | Lead Economist (Trade and Regional Cooperation) in the Office of the Chief Economist at the Asian Development Bank (ADB), Manila