In an analyst note, Morgan Stanley finds the window for resolving the trade dispute is narrowing. Without resolution in the next month, the trade war will bite into global growth.
"If talks stall, no deal is agreed upon and the US imposes 25% tariffs on the remaining $300 billion of imports from China, we see the global economy heading towards recession," Morgan Stanley's analysts wrote. Under that scenario, the US Federal Reserve would have to cut interest rates, ultimately back to zero and China would need huge new stimulus, they said.
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I agree with this assessment by the way. I also think that China does not have the incentive (like smaller countries would) to actually give into Trump's Bluster. They are much more likely to wait him out to help him out of office before they make any kind of trade deal or until Trump dies in office (whichever comes first).
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