A new warning that Trump's trade war could cause a global recession

Bank of America-Merrill Lynch's global research team predicted that "a trade war could cause a global recession" should "across-the-board tariffs on US-China trade" come to pass, analysts said in a note to clients Friday morning.

Driving the news: President Trump raised tariffs on $200 billion of Chinese goods from 10% to 25% overnight, following through on his threat from earlier this week, and could move to impose new tariffs on all Chinese exports to the U.S.

• The trade war also would likely bring major changes to the policies of the Federal Reserve and European Central Bank.
• Fund managers have taken notice and pulled $20.5 billion out of equities in the week ending Wednesday, according to BAML's data, and $116 billion out of equity funds so far this year. That matches outflows seen in 2016 and 2008.

Yes, but: Analysts also note an imminent trade deal should allow the global economy to continue to grow above trend — and the market outlook remains that a deal will get done, likely in the next few weeks.

• Investors have largely been pricing in a positive resolution to the trade war, pushing the S&P 500 up by 15% so far this year. The index rose to an all-time high just last week.

Go deeper: The world can't afford a trade war right now