Here's what it would look like if Trump started a trade war with China
Wall Street's top investment banks are preparing clients for the worst possible trade war outcomes as the U.S. prepares to ratchet up its tariffs on goods imported from China, telling clients to "fasten your seat belt and don't hold your breath."
Strategists from UBS to Bank of America detailed their worst-case scenarios for the U.S., Chinese and European stock markets, with all forecasting more selling if Washington can't remedy its trade spats around the world.
Market jitters stemming from an escalated trade fight between the globe's two largest economies could be so bad that is could send the S&P 500 in a correction, wrote UBS strategist Keith Parker. In that bear case scenario, Parker added, European markets and cyclical U.S. sectors including metals, mining and automobiles could be in for the most pain.
Parker said that UBS predicted a max trade-related sell-off of 19% back in the fourth quarter of 2018, but he now sees about 10% downside.
"With risks having increased, it is worth asking where the largest asset market moves could occur if trade tensions were to rise further," the strategist wrote Tuesday.
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