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Goldman Sachs raises recession alarm as US-China trade war intensifies

US President Donald Trump announced on August 1 that he would impose a 10% tariff on a final $300 billion worth of Chinese imports on September 1

Reuters 

Group Inc 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 of US imports from China to go into effect," the bank said in a note sent to clients.

US President announced on Aug. 1 that he would impose a 10 per cent tariff on a final $300 billion worth of Chinese imports on Sept. 1, prompting China to halt purchases of US agricultural products.

The United States also declared China a 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.

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 U.S. companies to reduce their domestic activity, the note said. Such "policy uncertainty" may also make companies lower their capex spending, the economists added.

 

First Published: Mon, August 12 2019. 09:49 IST
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