That last point from Morgan Stanley (that a major escalation in trade tensions would spill over and threaten to derail economic momentum in the U.S.) is the subject of vociferous debate. Notably, Goldman doesn't agree, writing the following in a new note: Historically the US has been fairly immune to foreign spillovers. According to our analysis of the historical causes of US recessions, it has been about a century since the US last ‘imported’ a recession via weak global demand or financial contagion. That said, the bank does caution that thanks to the interconnectedness of global markets, the risk of financial contagion (e.g., turmoil in global equity markets spilling over into U.S. stocks) is now greater than ever.
Trade War Delirium: We're All Afflicted | Seeking Alpha