The winners and losers from the escalating US-China trade war

Which asset classes will benefit?

The escalating spat between the US and China threatens risk assets, but is a boon for defensive holdings and could see the Chinese central bank engage in monetary stimulus to mitigate the effect on the economy, commentators have said.

Tensions between the US and China escalated last week, as President Donald Trump slapped further tariffs of 10% on $300m worth of Chinese goods that until now remained unaffected by the previous trade tensions. This triggered a reaction from the Chinese central bank, which allowed the country's currency - the renminbi (or yuan) - to fall below the level of RMB7 to the US dollar, a psychologically important threshold. This caused a crash in global markets, with US and UK stocks suffering their worst falls so far this year and Asian markets sliding on the fears the trade dispute could e...