I expect the overall losses to China to be marginal. The total tariffs increase has impacted close to 10% of the total exports of China. The net exports for China (i.e. exports less imports) are close to US$ 500 billion (i.e. 3.8% of GDP).

From an economic standpoint, GDP is a function of net exports (and not total exports). So if we look from that perspective, the total impact will be on worth 0.38% of Chinese GDP (i.e. 10% x 3.8%) - the corruption purge and tightening of financial markets had a much bigger impact on China than the trade wars.

The only drawbacks are the possible rise in the domestic inflation and the public nature of this “war” which can harm the growth story of China. The rise in inflation could lead to fiscal and monetary tightening (i.e. higher interest rates), and thereby put pressure on the balance sheets of the banks due to a potential rise in non-performing assets.

The public nature of the “war” could benefit China indirectly. Among the companies based in Asia, I see a shift in perception towards China - from being seen as a closed economy/ low-cost manufacturing to a country which supports free trade. This, in the long-term, should cover for any loss due to the US policies through higher investment and trade from within Asia. There are talks in China for further economic relaxation/ liberalization/ experimentation, which will be much better for the economy of China (and for overall Asia) in the longer-term.

On the other hand, US also has significant risks from this “war” - they are hampering their own supply chains, importing inflation & fiscal risks, and risking their currency pricing, in an environment where there are several uncertainties (e.g. NAFTA, Fed rates, mid-terms, etc.).

I do not see any winner or loser in this “war” - just that I would tend to believe that the US will lose more than China.