With no respite in sight in the ongoing US-China trade war, economists and experts are wary of the crisis leading to a recession. Goldman Sachs Group said 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. The company added that 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.
The year-long trade dispute has revolved around issues such as tariffs, subsidies, technology, intellectual property and cyber security, among others.
Europe, sandwiched between the two economies, is likely to take a major hit by the trade face off between US and China. The bill for damages from the US-China collision could be painfully high, starting this week if new growth figures show that Europe's economic motor, Germany, is stalled or shrinking. Germany, Europe's largest economy, is a key trade partner of both the US and China.
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If the trade wars escalate to include higher US tariffs on cars made in Europe, the picture could look even worse.
US President Donald Trump had announced on August 1 that he would impose a 10 per cent tariff on a final $300 billion worth of Chinese imports from September 1, prompting China to halt purchases of US agricultural products.
The US also declared China a currency manipulator.