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The trade war -- what is not in the price

Widely discussed economic scenarios underplay dire consequences of US-China dispute

| North America

Veteran financial traders often lament that their younger co-workers have never lived through a bear market. But it is fair to say that no one alive has experienced a trade war comparable to what the U.S. under President Donald Trump is starting.

Before the tariffs now being imposed on a range of products from China, it was solar panels, washing machines, steel and aluminum. What's next? We believe it is a foregone conclusion that the "national security" auto case will result in tariffs -- likely against high-end cars from European and Japanese automakers -- before the November midterm elections. Why? Peter Navarro and Robert Lighthizer, Trump's top trade advisers, believe they know what to do based on the U.S. experience in the "car wars" with Japan in the 1980s.

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