Analysts at Danske Bank point out that trade talks between USA and China seemed to be heading in the right direction, but took a surprising turn in early May, as the US decided to raise tariffs from 10% to 25% on $200bn worth of Chinese goods, implemented on May 10th.
Key quotes
“China has never been a fan of negotiating while having a gun to their head, which is likely to result in a postponed deal.”
“China may believe it has time on its side because Trump is heading into an election campaign and is currently underestimating the pain that will be inflicted on the US economy by a full-blown trade war.”
“If Trump carries out the tariffs on the rest of imports from China, Chinese consumers may react by boycotting US products.”
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