Opinion

Worst case scenario: Here’s what it looks like if Trump starts a trade war with China

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By Thomas Franck for CNBC

All signs point to an escalation of the trade war between the United States and China, the world’s two-largest economies.

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President Donald Trump tweeted Sunday that he would seek to increase tariffs to 25% on $200 billion worth of Chinese goods starting at 12:01 a.m. ET Friday due to China pulling back on trade promises. China is still sending a delegation to negotiate this week, but right now it looks like an all-out trade war is about to begin.

The worst-case outcome there, say experts, is a fight that sends the S&P 500 into a correction — which would be 10% off that key indicator. The companies likely to be hardest hit, say the experts, are likely Boeing, Apple and Caterpillar. They are all down about 5% this week already.

Then the pain ripples into the metals, mining and automobiles sectors.

Fasten your seatbelt and don’t hold your breath,The latest escalation of the trade war was completely unexpected, despite the strength of the economy and the markets.

Bank of America strategists wrote in a note this week.

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