AVA- Stock and bond markets could also be hurt by a general loss of confidence in the economy, ECB economists said in research published Wednesday.
"An escalation of trade tensions could have significant adverse global effects" on US economic growth, the authors said.
One particular conclusion by the study was that the country starting the trade war would wind up worse off than before.
“Qualitatively, the results are unambiguous: an economy imposing a tariff which prompts retaliation by other countries is clearly worse off. Its living standards fall and jobs are lost," the report said.
US President Donald Trump has imposed tariffs on imported steel and aluminum, and on a range of Chinese goods, carrying through on his election campaign rhetoric.
His stated goal is to protect US companies and workers from what he sees as unfair trade, and to use the tariffs as a lever to push for new trade arrangement.