"Already the IMF (International Monetary Fund) and the World Bank have indicated that the uncertainty caused by trade differences is adversely affecting the global market," she added.

In this regard, Gu pointed out that the worsening trade dispute has incurred turmoil to the U.S. financial markets in the short term, not least the stock market, with the Dow Jones Industrial Average plunging 623 points, 2.37 percent, on Friday.

"What worries me the most is that the trade war will damage U.S. consumer confidence (in the long term)," Gu said. "As inverted yield curves emerged several times, the possibility of a potential recession will greatly build up if the U.S. Federal Reserve does not take decisive measures."

Gupta also expressed similar concerns, saying that the worsening trade dispute would have a more lasting consequence for investor sentiment within the U.S. macro economy, as the financial markets have been jittery over the past year with the ups-and-downs of the trade tensions between China and the United States.

"The uncertainty and tit-for-tat retaliation will do nothing to reverse such downbeat sentiment. The trade war will in fact exacerbate these economic headwinds, especially as President (Donald) Trump heads into his re-election campaign," the scholar said.

Gupta, however, expressed confidence in the Chinese economy, saying that China will be able to navigate through these multiple shocks, even though it might encounter some difficulties due to the U.S. imposition of additional tariffs.

"China's overall current account is almost in balance, meaning that net exports are a very tiny driver of growth. China's macro-economy is fundamentally domestically driven," he said.

Despite external uncertainties, the Chinese government has been able to employ economic stabilizers and maintain its gross domestic product growth within the range of 6-6.5 percent, he added.

Related

Go to Forum >>0 Comment(s)