May 10, 2019

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

Photo: Wang Zhou/AFP/Getty Images

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

Go deeper

Coronavirus updates: World case count tops 600,000

Data: The Center for Systems Science and Engineering at Johns Hopkins, the CDC, and China's Health Ministry. Note: China numbers are for the mainland only and U.S. numbers include repatriated citizens and confirmed plus presumptive cases from the CDC

Japanese Prime Minister Shinzo Abe warned that the novel coronavirus pandemic could worsen if people fail to take the appropriate containment measures, at a Saturday news conference in Tokyo.

The big picture: The U.S. leads the world in confirmed coronavirus cases, as the number of global cases nears 620,000. Governments around the world are trying to curb the medical and financial fallout of COVID-19, as infections surge across Europe and the U.S.

Go deeperArrowUpdated 12 mins ago - Health

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 11 a.m. ET: 618,043 — Total deaths: 28,823 — Total recoveries: 135,736.
  2. U.S.: Leads the world in cases. Total confirmed cases as of 11 a.m. ET: 104,865 — Total deaths: 1,709 — Total recoveries: 894.
  3. Federal government latest: President Trump signed the $2 trillion coronavirus stimulus bill to provide businesses and U.S. workers economic relief.
  4. State updates: A group of Midwestern swing voters that supported President Trump's handling of the coronavirus less than two weeks ago is balking at his call for the U.S. to be "opened up" by Easter. Alaska is latest state to issue stay-at-home order — New York is trying to nearly triple its hospital capacity in less than a month.
  5. World updates: Italy reported 969 coronavirus deaths on Friday, the country's deadliest day. In Spain, over 1,300 people were confirmed dead between Thursday to Saturday.
  6. Business latest: President Trump authorized the use of the Defense Production Act to direct General Motors to build ventilators for those affected by COVID-19. White House trade adviser Peter Navarro has been appointed to enforce the act.
  7. What should I do? Answers about the virus from Axios expertsWhat to know about social distancing.
  8. Other resources: CDC on how to avoid the virus, what to do if you get it.

Subscribe to Mike Allen's Axios AM to follow our coronavirus coverage each morning from your inbox.

The one-minute coronavirus story

Illustration: Sarah Grillo/Axios

News about the coronavirus is so big and coming so fast that it's hard to remember what happened just last week, let alone last month.

Here's the quickest possible review of the story so far — how it happened and how the U.S. lost control.

Go deeperArrow3 hours ago - Health