Economists said the months-long threat of tit-for-tat tariffs on tens of billions of dollars of trade goods between the world’s two biggest economies – which officially came into force last Friday – would not have a significant impact until next year, if the row continues.

The US implemented duties on US$34 billion of Chinese goods on July 6, with China immediately taking dollar-for-dollar counter-measures to the same value of US goods.

Washington raised the stakes this week by threatening to impose fresh tariffs on US$200 billion in Chinese goods, with Beijing vowing it would retaliate once again.

Exports are still a significant chunk of China’s economy and the tariffs implemented or announced by Washington target a vast range of goods, including cars, machinery, electronics and consumer appliances.

If US President Donald Trump follows through with his latest threats, the US will have imposed tariffs on around half of China’s total exports to the country.

Capital Economics said the cumulative impact of the measures now on the table could potentially reduce China’s overall economy by 0.5 percentage points, but that the impact could deepen if the battle escalates.

With a smaller share of US imports to retaliate against, Beijing is seen ultimately as having a weaker hand.

If a full-blown trade war develops, China may have to retaliate in services and investment, and by potentially erecting new hurdles for US corporations operating in China, said Liao Qun, chief economist with Citic Bank International.

“The real impact will start to show next year,” Liao said. “And if it is a full-blown trade war, in the worst case scenario, China’s GDP growth could fall below 5 per cent.”

Tianjie He of Oxford Economics said the economic growth rate could shrink by 0.2 percentage points if the US were to go ahead with the additional $200 billion in tariffs and China retaliates.

“In addition to the impact on GDP growth, the added uncertainty is already dampening business confidence and delaying investment globally,” He said. “Overall, the trade war will weigh on growth, confidence, financial markets and supply chains.”

The key Shanghai Composite Index has already fallen 14 per cent this year during the turbulence.

Liao added that over the short term China – which has waged a campaign to discourage excessive credit because of fears of ballooning debt – is likely to shift gears slightly and loosen monetary policy to keep the economic growth rate up, and may offer subsidise to exporters.

Over the longer term, the China-US trade war could spur Beijing to super-charge its current push to encourage domestic demand as a proportion of the economy, a strategy taken in part to lessen exposure to the rise and fall of global export demand.

“The best case is that the US backs off,” Liao said. “If the US shows an intention to back off, China would definitely compromise.

“But it is really hard for people to predict what the US will do.”