Mitul Kotecha, Senior Emerging Markets Strategist at TD Securities, points out that the US administration will impose 10% tariffs on $200bn of Chinese goods and could increase this to 25% by the start of 2019 in the event that no deal is reached.
Key Quotes
“Any retaliation from China could see tariffs imposed on a further $267bn of Chinese imports to the US, effectively covering all Chinese exports to the US.”
“China has convened a meeting to discuss its response. We think China will respond with tit for tat tariffs soon, but is more limited in scope compared with the US (as imports from the US are one-third the size of exports to the US).”
“Other regulatory measures could be imposed by China on the US, but it seems unlikely that China will opt to depreciate the CNY further over the short term.”
“While casting a shadow over Asia, the immediate market reaction may be limited given that tariffs on $200bn of Chinese imports have been in the pipeline for a while.”
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