Opinion | As the US and China seek to win the trade war, the whole world could end up the loser on climate change

The escalating trade feud between the United States and China is increasingly viewed as the opening campaign of a new cold war. But this clash of titans, should it continue to escalate, will cost both parties dearly, to the point that even the winner (more likely to be the US) would probably find its victory Pyrrhic.

Already, bilateral tensions are contributing to an economic decoupling that is reverberating across the global economy. If the end of the cold war in 1991 launched the golden age of global economic integration, the beginning of the next cold war between the world’s two largest economies will undoubtedly produce division and fragmentation.

It is easy to imagine a world divided into two trade blocs, each centred on a superpower. Trade within the blocs could continue, or even flourish, but there would be few links, if any, between them.

The global financial system would also unravel. President Donald Trump’s administration has shown just how easy it is for the US to hurt its foes (such as Iran) by using sanctions to deny them access to the dollar-denominated international payment system. Given this, America’s strategic adversaries, China and Russia – and even its ally, the European Union – are trying to establish alternative payment systems to protect themselves in the future.