Washington/Beijing – The U.S.-China trade war has entered a dangerous new phase. Tariffs are up and there’s the threat of more to come. A quick fix is still possible, with Presidents Donald Trump and Xi Jinping set to meet at the G-20 summit next month. But at this point, it looks more likely that the trade war will be long, messy—and expensive.

Bloomberg economists Dan Hanson and Tom Orlik have mapped out the main scenarios. Their headline conclusion: If tariffs expand to cover all U.S.-China trade, and markets slump in response, global GDP will take a $600 billion hit in 2021, the year of peak impact.

On May 10, the U.S. took tariff rates on $250 billion of Chinese exports to 25%. Retaliation was swift, with China raising tariffs on certain U.S. goods in a range from 5% to 25%. Two years out, Bloomberg Economics’ modelling suggests that output in China and U.S. would be lower by 0.5% and 0.2% respectively, relative to a no-trade-war scenario. Global output would also come down a notch. More on BLOOMBERG