Precedent · Geopolitical
Trade War & Tariff Shock
2018–2019
A tariff-driven trade conflict, anchored on the 2018-19 US-China escalation and generalized to the 1930 Smoot-Hawley tail. Each escalation spiked equity volatility, manufacturing PMIs rolled over, input costs rose, and capex paused on uncertainty — a clear growth and margin drag without (in 2018-19) a recession.
The signature
Each variable's peak deviation from the pre-event baseline, with the curve shape, the lag before it moved, and how long the recovery ran.
| Variable | Peak deviation | Shape | Lag / Recovery | Confidence |
|---|---|---|---|---|
| VIX Vol spiked on each escalation; Q4-2018 | +90% | Spike | 0d lag · 200d | medium |
| S&P 500 Late-2018 ~19% selloff, recovered 2019 | −15% | V | 0d lag · 200d | medium |
| Real GDP Capex + manufacturing drag, no recession | −1% | U | 90d lag · 365d | medium |
| CPI Inflation Tariff pass-through to goods prices | +8% | Ramp | 60d lag · 365d | medium |
Methodology
A composite anchored on 2018-19. The signature is volatility + margin pressure rather than collapse: equities chop with sharp vol spikes (the Q4-2018 selloff), inflation ticks up on tariff pass-through, GDP shaves, and manufacturing contracts. Smoot-Hawley is the tail — a tariff spiral that turns a slowdown into a depression. Shapes: spike (vol), V (equities), ramp (inflation).
What's different now
Reshoring and tariffs are live today, so read this for the margin + supply-chain transmission. 2018-19 stayed contained because the Fed pivoted dovish into it; a tariff shock arriving during a tightening cycle, or one broad enough to invite retaliation, propagates far worse.