US will soon realize the folly of a tariff war

It is unwise to predict if the burgeoning tariff war between the world's top two economies will be a short or protracted fight, given the unpredictability of US President Donald Trump. That is because after the US midterm elections in November, the economic impact of Trump's approach could become clearer.

Making good on his threat to levy punitive duties on imports for the benefit of the US economy, the Trump administration proposed 10 percent tariffs on thousands of Chinese products worth $200 billion on Tuesday, following hefty duties imposed on $34 billion of Chinese imports on July 6.

Last week, the Bank of England, Britain's central bank, forecast that further escalation in the trade dispute, or a 10 percentage-point rise in tariffs between the US and all of its trading partners, could chip 2.5 percent off US output and 1 percent off global economic output.