It has taken the gloss off economic growth and is starting to have serious impact on global trade volumes.
Last week the International Monetary Fund quietly downgraded its forecasts - again.
It predicts growth of 3.2 per cent in 2019, down from April forecasts of 3.3 per cent.
Growth is tipped to pick up next year, but "remains subdued", the IMF says.
It highlights an urgent need to reduce trade and technology tensions.
Those who claim Trump's tariff's policy is really a US own goal will be interested to see the IMF predicts that the US economy will see a more significant slowdown as the stimulus from tax cuts fades.
After 2.9 per cent growth last year, it predicts 1.9 per cent US GDP growth in 2020.
Of course, the perverse side effect of the slowing economy has been to boost equity markets.
The worse things get the lower interest rates go and the better stock market returns look, relative to anything else you can do with your money.
China's imports from the US plunged 31.4% in June from a year earlier amid a tariff war with Washington, while exports to the US market sank 7.8%, Customs data showed. Photo / AP
There's an internal logic to that but we really need to step back and see this for the unsustainable paradox it is.
Headline's like this one (CNBC, July 5) put it into stark focus: "Stocks fall from record highs after strong jobs report dampens hope of a Fed rate cut".
Night is day, black is white and bad is good - but in a cool 1980s slang kind of way.
The only relatable comparison I can think of is those occasions in big sporting tournaments when we end up hoping we lose a round robin game because it will result in an easier run in the knock-out phase.
Real sports fans frown on that kind of thing. A champion team takes on all comers.
If you want to win at sports you should never hope your team loses and if you want to create wealth you should never hope the economy gets worse.
In short, if you are hoping the economy gets worse so your stock price goes up then you are living in a false reality.
Of course, if the rise of Trump has proved anything, it's that a false reality can be just as lucrative as a real one – at least as long as you can convince people to keep believing it.
Logic suggests that the global economic slowdown must start to hurt corporate profits.
But for now the vast sums of capital looking for ever higher returns dictate the dominant version of reality.
On that basis the stock market has been on another remarkable run in the past few weeks.
In New Zealand the NZX-50 has put on more than seven per cent in the past two months. It is now up 23 per cent year to date.
In the US all the major Wall Street indices are trading at record highs.
A trader works on the floor of the New York Stock Exchange. US stocks have been falling on good economic news. Photo / AP
The dodgy logic of these incredible stock market values will be laid bare in the next few weeks by earning seasons here and in the US.
But the analysts barely care.
What we've seen in the US already is that solid results are viewed as "good enough" for now.
And so the reality gap between real-life earnings and valuations grows - or inflates - into bubble territory.
Which makes some real progress on the trade front all the more important.
The global economy needs a boost from something other than monetary policy.
The problem for market analysts and economists trying to assess the prospect of the talks, is that US policy goals under Trump are far from clear.
The US administration has put tariffs on US$250 billion in Chinese goods — and threatened to put duties on even more products. Beijing has retaliated with tariffs on US$110b in American goods.
Is Trump really invested deeply in changing the power dynamic between the US and China. Or is he just after short-term political wins?
I'd say that the President is more concerned about the latter but there are powerful people in the US administration who want to hold firm, for the former.
Trade analysts are picking the most likely positive result from this week's talks is a timetable and framework for dialling back the trade barriers - one which plays out over several months.
Markets would like that. It would be good news - but not so good it deterred central banks from rate cuts.
That kind of timeframe might suit Trump too. Putting an eventual resolution (and his inevitable claims of trade war victory) smack in the middle of the US presidential election campaign.
Or it might all fall to pieces, furthering darkening the economic outlook.
Given Wall Street's current "fantasy land" mode, markets might even like that too.
