Japan’s economy risks taking another hit if US President Donald Trump slaps fresh tariffs on China, sparking a renewed US-China trade war, according the government’s chief economist.

There is a persistent murmur in financial markets that the Trump administration may push through a grand bargain to weaken the overvalued U.S. dollar. But there are multiple problems here, not least Europe's likely unwillingness to play ball.

According to Tom Kloza, the global head of energy analysis at Oil Price Information Service, if fuel producers respond to the tariffs by cutting production, gasoline prices in the Midwest could climb 15 to 20 cents a gallon, with more muted effects in other parts of the country.

Trump’s tariffs could upend world trade and prompt domestic production. In recent months, plenty of business executives have said they were taking a wait-and-see approach to U.S. President Donald Trump ‘s broad threats of tariffs.