US-China truce does not equate to end of trade war - NBF

Krishen Rangasamy, analyst at National Bank Financial, suggests that while June’s G-20 meeting ended with the U.S. and China agreeing to a truce in their ongoing trade war, the threat of additional trade barriers at some point in the future hasn’t gone away.

Key Quotes

“The proposed 25% tariff on the remaining US$300 bn or so of U.S. imports from China that are currently exempt, may yet go ahead depending on how polls evolve for Trump ahead of next year’s U.S. elections. And of course there are potential U.S. tariffs that could be slapped on European and Japanese autos as early as November (via Section 232 of the U.S. Trade Expansion Act), and on other European goods.”

“If the U.S. goes ahead with the new trade barriers it is currently considering, its average import tariffs would roughly double and be well above the G-20 average of 2%. Regardless of whether or not new trade barriers are imposed, world GDP this year is set to grow at the slowest pace in years courtesy of earlier tariffs which continue to restrain global trade flows.”