It Was the Week Trade Wars Went From Uncomfortable to Scary

(Bloomberg) --

It's been a week of trade pain that changes a lot about the global economic outlook.

President Donald Trump's threat Thursday to put 10% tariffs on the remaining $300 billion of Chinese imports that aren't subject to his existing levies sent markets tumbling from Asia to Europe and in the U.S. on Friday. The new tax would hit American consumers, and businesses are going to face even more supply disr uptions. China has already vowed to retaliate if Trump follows through.

Bloomberg Economics' initial estimate of the additional costs of U.S. tariffs and Chinese retaliation sees both economies taking a 0.2% hit to GDP by 2021.

Meanwhile, a simmering trade fight between Japan and South Korea is boiling over, putting the health of two Asian export powers at stake. In Europe, concerns are mounting for a hard U.K. exit from the European Union.

The week ended with fresh numbers out of Washington that show U.S. trade actually declined during the first six months of the year as exports flattened out.

Here are the big developments since Trump made his announcement, click on the links to read more:

China promised to retaliate against “blackmailing” if Trump goes ahead with more tariffs.
- From slapping on more tariffs to shunning U.S. soybeans, here are ways Beijing could retaliate.

Trump's growing impatience risks denting American consumers' wallets to break the deadlock.

Consumer goods are the targets in the latest tariff barrage, with Apple among the most exposed.
White House economic adviser Larry Kudlow suggested Beijing could strengthen the case for avoiding tariffs being applied next month if they bought U.S. agricultural products.
The slowing global economy faces a stronger headwind, challenging central bankers to respond.

Goldman Sachs sees a greater chance the Federal Reserve will lower interest rates next month.

Wall Street is warning about the consequences of a lengthy trade fight.
China has a heavy arsenal of monetary and fiscal policy to counter the damage from new tariffs.
Bloomberg's Trade Tracker index got another nudge down after an ugly month for U.S. exports.
The U.S.'s merchandise trade deficit with China widened slightly in June to a five-month high.
Trump and Boris Johnson spoke for the second time since the British prime minister took office last week, agreeing to cooperate on trade and global security.
Japan and Korea swapped export control measures, risking chaos in tech supply lines globally.
South Korea's Financial Services Commission said it will give “swift and sufficient” financial support to companies affected by Japan's export restrictions.
Oil finished down for the week as positive U.S. jobs news wasn't enough to erase a plunge triggered by the escalation of the trade war.
Copper fell to a two-year low in after-hours trading in London and mining shares plunged.
Trump ribbed an EU trade delegation at the White House, joking that he was poised to impose crippling tariffs on German cars.

Read Bloomberg Opinion's take on the trade tensions:

To contact the reporter on this story: Brendan Murray in London at brmurray@bloomberg.net

To contact the editors responsible for this story: Simon Kennedy at skennedy4@bloomberg.net, ;Zoe Schneeweiss at zschneeweiss@bloomberg.net, Brian Wingfield, Sara Marley