A trade war between the U.S. and China is the “greatest threat to the world economy,” the chairman of J.P. Morgan Chase International said on Friday.
“I think it’s the greatest danger today to the world economy,” Jacob Frenkel told CNBC’s Steve Sedgwick at the European House Ambrosetti Forum.
“It’s still not a trade war — I would say there were some skirmishes, and there are skirmishes. I think we should all remember the disaster of 1931 — always good intentions, to protect American jobs, and the result was a catalyst to the Great Depression. We should avoid it at all costs.”
Frenkel’s comments come amid an escalating trade tussle between the world’s two largest economies that has dominated headlines for the past few weeks, kicked off by President Donald Trump’s announcement of sweeping tariffs on all Chinese steel and aluminum imports in early March.
The latest move in a continuing tit-for-tat battle saw Beijing on Wednesday unveil tariffs of 25 percent on 106 U.S. export products, amounting to $50 billion annually.
Trump raised the stakes on Thursday when he said he had instructed the United States Trade Representative to consider $100 billion in additional tariffs against China. Frenkel warned against an escalation in the trade dispute.
“A world that is so interdependent, so interconnected, cannot afford shooting each other,” he told CNBC’s “Squawk Box Europe.” “The world in which the rules of the game are an eye for an eye is a world in which there are many blind people.”
Frenkel said he was not going to be a spokesman for the U.S. administration but that generally Trump’s policies had so far been positive for the business sector.
“Some of the policy actions, the reduction in corporate tax rates, the repatriation of revenues, the deregulation, they have all been received very enthusiastically by the investment sector,” he said.
