US-China trade war escalating? – Danske Bank

Last night, the Trump administration announced a new 10% tariff on USD200bn worth of Chinese products, notes the research team at Danske Bank.

Key Quotes

“A 10% tariff is less than previously feared, but at the same time, President Trump threatened to increase the tariff to 25% in 2019 unless a deal is reached to ease trade tensions.”

“The total value of imported goods from China covered by Trump's tariffs is now USD250bn or roughly 50% of total US imports from China.”

“China has promised to retaliate to any US measures against China one-to-one and with the new tariffs from the US side, it is difficult not to see the trade war escalate further - also in light of the US mid-term elections.”

“In our view, a deal seems unlikely before well into 2019. The risk is that it drags on. At least, China seems to be preparing itself for a long-lasting trade war by (among other things) easing economic policy.”