Abu Dhabi, UAESunday 17 November 2019

Goldman sees no US-China trade deal before 2020 elections

Investment bank lowered its fourth-quarter US growth forecast by 20 basis points to 1.8 per cent

US President Donald Trump's tariffs on Chinese goods are due to kick in on September 1. AFP
US President Donald Trump's tariffs on Chinese goods are due to kick in on September 1. AFP

Goldman Sachs said on Sunday that fears of the US-China trade war leading to a recession are increasing and that Goldman no longer expects a trade deal between the world’s two largest economies before the 2020 US presidential election.

“We expect tariffs targeting the remaining $300 billion (Dh1.1 trillion) of US imports from China to go into effect,” the bank said in a note sent to clients.

US President Donald Trump announced on August 1 that he would impose a 10 per cent tariff on a final $300bn worth of Chinese imports on September 1, prompting China to halt purchases of US agricultural products.

The United States also declared China a currency manipulator. China denies that it has manipulated the yuan for competitive gain.

The year-long trade dispute has revolved around issues such as tariffs, subsidies, technology, intellectual property and cyber security, among others.

Goldman Sachs said it lowered its fourth-quarter US growth forecast by 20 basis points to 1.8 per cent on a larger than expected impact from the developments in the trade tensions.

“Overall, we have increased our estimate of the growth impact of the trade war,” the bank said in the note authored by three of its economists, Jan Hatzius, Alec Phillips and David Mericle.

Rising input costs from the supply chain disruption could lead US companies to reduce their domestic activity, the note said. Such “policy uncertainty” may also make companies lower their capex spending, the economists added.

Updated: August 12, 2019 08:54 AM

SHARE

SHARE