Trump is winning the game of economic chicken right now with China, but that could soon change

The trade war may be hurting China more than the U.S., but by spring, China could be looking up as the U.S. slows, particularly if the friction continues, economists said.

According to Bank of America Merrill Lynch economists, the China slowdown could start to reverse in the next couple of months, due to large amounts of domestic stimulus. For the U.S., economists have been forecasting a slower second half of the year, with growth under 2 percent in some forecasts, as stimulus from tax cuts and spending wears off.

Trade negotiators are meeting in Beijing this week, and positive comments around those talks have been helping steady markets.

“So far the trade war has had a much bigger impact on Chinese growth than US growth. However, that could change by next spring,” the BofA economists said in a note. “…the US has tried to minimize the blowback from its tariffs by avoiding consumer products and either avoiding or giving exemptions for products without easy substitutes. Looking ahead, the next moves would be much more painful.”

The economists also say Chinese has more leverage to fight the impacts of the trade war on its economy, while the U.S. risks seeing a drop in confidence.

“The impact of the trade war on U.S. confidence seems to be growing,” BofA economists noted. “Until recently, consumer, business and investor confidence seemed to be Teflon coated when it came to policy uncertainty. The US had a big offset to the trade war-a double dose of tax cuts and spending increases. Now, with the stimulus fading, confidence seems more sensitive to news that would have been ignored in the past.”

Apple’s revenue miss, announced last week, also highlighted that the China was being impacted by trade wars and there potential for more damage to U.S. companies and the economy. Apple blamed a revenue shortfall in large part on iPhone sales in Chine. But the BofA economists also say that Apple’s revenue miss exaggerates the weakness in the Chinese economy, while other factors could be slowing Apple sales, including competition, price, an informal boycott of U.S. goods, and the drop in China’s currency.