US-China showdown: Global economy ‘will plunge into recession’ if G20 meeting turns sour

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The US-China trade war has kept investors on edge in recent months, with the sparring economic powerhouses locked in an increasingly bitter tit-for-tat tariff spat. Latest developments saw US President Donald Trump hike tariffs on a list of $200billion worth of Chinese imports from 10 percent to 25 percent. The American leader has also vowed to slap 25 percent tariffs on an additional $300billion worth of Chinese goods unless Beijing and Washington can reach an agreement. China has retaliated to US aggression by raising duties on a revised list of $60billion worth of US products to as high as 25 percent.

The attention for both sides now turns to the G20 summit this weekend, with President Trump and President Xi are due to meet in Osaka, Japan.

Peter Boockvar, chief investment strategist at Bleakley Advisory Group, told CNBC the global economy could turn sour if the outcome from the meeting is not positive.

He warned: “You just amp up the odds even greater that we’re going to have a global recession, if there’s no detente between the US and China.

“With respect to G-20, I don’t think there will be anything negative, and it will probably be a ‘kumbaya’ moment.”

President Trump has already threatened additional tariffs if his Chinese counterpart does not show up to the event, after Xi’s administration refused to confirm a meeting between the two leaders.

Speaking this week, US Treasury chief Steven Mnuchin said the G20 summit will be “very important” and claimed a trade deal between the US and China is “90 percent completed”.

He told CNBC: “We were about 90 percent of the way there and I think there’s a path to complete this.

“The message we want to hear is that they want to come back to the table and continue because I think there is a good outcome for their economy and the US economy to get balanced trade and to continue to build on this relationship.”

G20 will be the first time President Trump and President Xi have met since trade talks broke down in May, when the US accused China of reneging on reform pledges it made.

President Trump’s advisers have said no trade deal is expected at the meeting but they hope to create a path forward for talks.

Once negotiations resume, they could take months or even years to complete, the senior Trump administration official said.

One person familiar with the talks told Reuters if President Trump sees no progress and decides to raise tariffs, the relationship between the world’s two largest economies would deteriorate further.

They said: “I think if they go with the tariffs, the trade talks are dead. Period.”

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