Geoeconomic Dynamics Between the US and China

This technical report discusses the ongoing geoeconomic tensions between the United States and China, highlighting the potential impacts of a renewed trade war on global trade dynamics. It outlines the projected costs to global trade growth, estimating a decrease of 0.6 percentage points in 2026 due to increased tariffs, with a possible escalation leading to a 2.4 percentage point decline. The report details the economic strategies employed by both nations, contrasting China's 'silk' doctrine with the US's 'godfathering' approach. It also examines the implications for the European Union, noting the costly alignment with the US and the need for the EU to navigate its own economic strategies amidst these tensions. The report further analyzes the shifting supply chains and emerging trade hubs in Asia and other regions, emphasizing the complexity of global trade flows and the geopolitical influences shaping them. It concludes with insights on how countries are positioning themselves in this evolving landscape, suggesting that business opportunities may arise in new trade hubs despite the ongoing conflicts.