Business Standard

Could a US recession end the trade war?

In recent downturns, the US has been more willing than normal to cooperate with China in order to try to spur recovery

illustration: Binay sinha

illustration: Binay Sinha

Shang-Jin Wei
The recent inversion of the yield curve in the United States — with the interest rate on 10-year US government bonds currently lower than that on short-term bonds — has raised fears of a possible US recession later this year or in 2020. Yet, paradoxically, a downturn in America could help to improve bilateral economic relations with China and cool the two countries’ escalating trade dispute.

Recent history offers grounds for such predictions. True, by reducing import demand, US recessions normally have a negative impact on economies with a high trade-to-GDP ratio, including China. However, in recent downturns, the US also
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of or the Business Standard newspaper

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First Published: Aug 30 2019 | 12:05 AM IST

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