Brendan Rynne, KPMG’s Chief Economist, assesses the extent of domestic and world economy risks from the current tensions in global trade arrangements.
Retaliation by the rest of the world to any US tariffs would cause economies such as Canada, the EU and the UK to tip into recession, economic modelling by KPMG Australia has shown. It would also create substantial job losses in Australia.
But the overall global economy would escape a recession due to much faster real GDP growth rates of large, emerging economies, such as China and India.
Our analysis is based on four hypothetical retaliatory trade scenarios: