Trade tensions between the U.S. and China have been building over the course of 2018. These tensions have escalated over the last month, but while risks are rising, economic disruptions have remained minimal. We continue to believe the final economic impact of current trade tensions won’t be insignificant, but will be small relative to the short- to intermediate-term positive impact of deficit-financed fiscal stimulus, business-friendly changes in the tax code, and deregulation. We do remain concerned with Trump administration efforts to simultaneously shift terms of trade with all major trading partners: China, the European Union, Canada, Mexico, and, to a lesser extent, Japan, who together accounted for over two-thirds of total U.S. trade. While all of these negotiations are important, trade relations between the U.S. and China — the world’s two largest economies — remain the focus.