Global growth could pay the price if the U.S. and China keep fighting over trade, warned Paul Gruenwald, chief economist at S&P Global Ratings.

“The trade by itself doesn’t really move the needle in terms of the macro. But what we’re worried about is the trade spat drags on … consumers stop spending so much, firms stop investing, confidence goes down, and we go to a less good growth path,” he said.

And if the world’s two biggest economies enter a full-fledged trade war, it could cause a “significant reduction” in growth — although a global recession is unlikely, he told CNBC’s Oriel Morrison at the Asian Development Bank’s annual meeting in Manila.

Trade talks are ongoing in Beijing between the two countries, which have announced plans to levy tariffs against each other.

China has canceled several shipments of U.S. soybeans in the past month.

U.S. Treasury Secretary Steve Mnuchin and Chinese Vice Premier Liu He are leading their respective delegations in China, but a breakthrough deal is viewed as highly unlikely.

What should be expected from the talks is not an agreement on trade, Gruenwald said, but the start of discussions on investment and the protection of intellectual property (IP).

“I think the relationship between U.S. and China is much more complicated,” he said. “So it would be nice if the trade were an initial salvo into discussions about investment, IP, reciprocal investment — sort of go back to the strategic economic dialogue we had 10 years ago. That would start to go down the road to a better outcome.”

“But right now if it’s just a trade thing, that path doesn’t look too good to us,” he concluded.