Here come the trade wars – possibly. The Trump administration’s imposition of tariffs on $60bn (£42.5bn) of imports from China could be a huge moment for the global economy. Past presidents toyed with the idea of branding China a “currency manipulator” but have always stepped away from action. Trump hasn’t gone down that route, with its ill-defined policy implications, but has instead gone for the jugular. China is deemed guilty of “economic aggression” by pinching US intellectual property and must pay a price.

The consequences of that declaration depend on two things. First, will the size of the tariffs match Trump’s rhetoric about China engaging in abuse over decades? It is possible measures will be watered down if financial markets throw a wobbly, but Trump had advertised his intentions since taking office and you will struggle to find a chief executive of a large multinational that does not think China plays fast and loose. Chinese abuse of intellectual property rules is not a secret.

The second critical factor is how China responds. Beijing has repeatedly vowed to defend its “legitimate rights and interests” if targeted by US actions. But President Xi Jinping will also know that he is dealing with a US president who believes – seemingly sincerely – that the US would win a trade war.

Most economists would argue that everybody would end up poorer and that Trump’s talk of winning is absurd and dangerous. But it is also probably also true that export-dependent China has far more to lose than the US. So what would be the best self-interested Chinese response? In theory, Beijing should do nothing. It’s hard to believe that China would, in effect, concede that Trump has a point about intellectual property. But he does.

It’s crunch time for GKN and Melrose shareholders

The moment of decision approaches for undecided shareholders in the great GKN-Melrose £8bn hostile takeover battle. One company must stagger across the line next Thursday.

Which side deserves to win? It is tempting to say “none of the above”. Even if one sets aside the interests of the UK manufacturing industry (most fund managers will), there are risks in both directions.

The financial risk in GKN’s defence is that value evaporates in the whirlwind of corporate actions promised since Melrose made its move in January. The sale of the automotive division to Dana of the US, in which GKN investors would take a 47% stake, is not ideal. The headline price – about 7.5 times top-line earnings – is OK but not spectacular and Dana’s record is chequered. And investors are asked to take on trust that the powder metallurgy division, GKN’s smallest main business but a strongly performing unit, will fetch top dollar.

On the plus side, a purer focus on aerospace is a clean investment proposition. Demerger, regardless of the iffy Dana deal, was the right decision. GKN Aerospace is underpinned by cashflows that stretch over decades and is a top-tier supplier. GKN talks about long-term operating margins of 14%, which will require new management under its chief executive, Anne Stevens, to do better than the last lot, but the ambition is credible.

The risk with the Melrose offer is that GKN shareholders know even less about what’s in prospect. True, the “buy, improve, sell” mantra is easy to understand and plainly involves more than grubby asset-stripping. The Melrose crew, besides making megabucks for themselves, have also enriched their shareholders over the years. But, critically, they have done it at companies smaller, and much less complicated, than GKN. This would be a reverse takeover, remember, and a big departure from Melrose’s usual £2bn-ish diet. Is the bidder really credible?

The effective expression of no confidence in Melrose from Airbus, which does £700m of business annually with GKN Aerospace, is crucial. OK, Airbus may have doing its GKN chums a favour by speaking out, but there’s a real problem there that Melrose has struggled to address. Just saying you’d run the business “as if” you would own it forever isn’t convincing. Some big customers in an industry that runs on long-term partnerships will naturally place more faith in an owner that intends to hang around. If you want to buy a company with 55,000 employees and £10bn of annual turnover, you have do more than say “trust us, we’re brilliant”. Melrose’s arguments have rarely risen about that level.

The suspicion here remains as it did on day one: Melrose just spotted an undervalued company and banked on its City fanclub to do the rest. But GKN investors would keep 100% of the gains by backing their board that – just about – has managed to assemble a credible self-help strategy. Reject the bid.