Chart of the week: who will suffer most in a trade war?

If the trade spat between the US and China worsens, both countries' growth will suffer as they raise barriers against a wider range of goods and make it harder for foreign companies to gain footholds. That would be especially bad news for Germany, where goods exports to the US and China jointly comprise almost 6% of GDP, says Capital Economics. The next most-exposed countries are Australia and New Zealand, which both export 5.5% of their GDP to the US and China. This is a bigger percentage than China and America's direct export exposure to each other. Thirty-three per cent of Australian and 22% of New Zealand goods exports respectively go to China; 3% and 16% to the US.

Viewpoint

"British shares languish in the bargain basement Uncertainty about Brexit, plus the possibility of a Marxist chancellor have [hit] the FTSE 100... the UK stockmarket is trading on a [cyclically adjusted price-earnings ratio] of just over 15, compared with 20 in Germany, 27 in Japan and 30 in America. the global average for emerging markets such as Brazil, Russia, India and China is 17 Ritu Vohora, investment director at the fund manager M&G, calculates that, on one measure, UK shares are now the cheapest they have been since World War II. She bases her view on valuation by dividends or the income that shares pay investors relative to government bond or gilt yields. While the short-term outlook is challenging with elevated risks and international sentiment extremely negative, UK equities or shares are on sale with uncertainty discounted in prices,' she said."

Ian Cowie, The Sunday Times

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