President Donald Trump has ordered the US to impose tariffs on $50bn worth of Chinese goods - and China has said it will retaliate in kind.
The first round of these tariffs are due to take effect on Friday. Businesses will have to pay 25% additional tax on $34bn of certain Chinese products they import - including aircraft tyres and commercial dishwashers.
China will also start collecting a 25% levy on $34bn of US goods such as agricultural products and cars.
The US tariffs announced so far would affect the equivalent of 0.6% of global trade and account for 0.1% of global GDP, according to Morgan Stanley.
The bank estimates that every $100bn of imports affected by the tariffs represents about 0.5% of global trade and 0.1% of global GDP.
Analysts are also concerned about the impact on others in the supply chain and about an escalation of tensions between the US and China in general.
Washington-based think tank the Peterson Institute for International Economics (PIIE) expects US tariffs on Chinese goods, which it says particularly target computers and electronics, to hurt multinationals more than China as well as other firms in Asia.
"China will feel some pain but not as much as these firms in the supply chain that contribute such a large share of the value added in Chinese exports," Peterson wrote.
The fight could also affect other parts of China-US relations. Given that the US buys nearly four times as much from China as it sells to them, China may have to seek avenues other than trade to retaliate if the battle escalates.
"China can impose leverage in areas outside the economic sphere. In the most extreme case China could undermine the ability of the Trump administration to conclude a nuclear deal with North Korea," Peterson added.