The $4.1 trillion dollar question

With the two largest economies in the world at loggerheads, many investors and commentators are trying to figure out the end game. Alex Duffy, Portfolio Manager at Fidelity instead suggests focussing on the impacts on individual markets. 

“Specifically, when I look at China, I’m far less worried about the impact of a tariff on $400B or $500B worth of goods. Tariffs of 15-20% on $400 billion isn’t a huge delta in terms of the overall trade balance. Where it is far more relevant, is what it means for the currency.”1

Alex explain the tail risk that this creates, and some of the tools China has at its disposal to manage these risks.

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1 References made to currency are in US dollars.