Even if the United States does come to a peaceful resolution of its trade disputes, economic pain may be unavoidable.
President Trump's public quarrels with other world leaders over trade has "absolutely" put the global economy at risk, Director-General of the World Trade Organization Roberto Azevedo said in an interview Wednesday.
"If the trade dispute escalates, there's the risk of a global downturn and we're already seeing signs that this downward process has already started," Azevedo told Handelsblatt, a German business newspaper, as reported by Reuters.
Trade disputes alone can not be blamed for stagnating corporate investments and GDP growth across the globe, PNC Financial Services Senior Economist William Adams said.
"In countries like Canada and Mexico there's definitely been a slow down in corporate investment due to uncertainty about access to U.S. markets and the NAFTA renegotiations," Adams said. "But in other countries as well there has been a slowdown in early 2018. In the Eurozone for example, the slowdown probably has more to do with growth returning to trend after a very good 2017 than with E.U.-U.S. trade relations."
Uncertainty about trade has also brought other long standing concerns such as political instability in Mexico and labor strikes in Brazil to the front of investors minds, Adams said.
"In the last couple of weeks, uncertainty about trade policy has reinforced some thematic risks to emerging markets and emerging market currencies to sell off against the dollar," Adams said. "Emerging markets were doing very well in 2017, riding the tailwinds of broad based loan expansion. But in 2018, higher U.S. interest rates and trade policy uncertainty has added headwinds, along with concerns that the global market cycle is aging."