US-China trade tensions remain elevated as the next round of China tariffs, 25% on another $200bn, is under review, according to analysts at Nomura.
Key Quotes
“A new round of US-China midlevel talks scheduled for this week may reflect a renewed effort to find common ground. Despite the increased effort, we believe it is more likely than not that additional protectionist measures will go into effect.”
“President Trump appears increasingly intent on challenging China’s trade and industrial policies and we do not see any meaningful change in China’s priorities. In this context it seems unlikely that negotiations will resolve the dispute within the next few weeks. In addition, we expect the Commerce Department to find that auto imports threaten to impair national security, allowing President Trump to move ahead with auto tariffs sometime over the next few months.”
“However, President Trump’s deal with EC President Juncker should, at a minimum, delay any further escalation of trade tensions between the US and EU.”
“Finally, NAFTA renegotiations are picking up again following the conclusion of elections in Mexico as US and Mexican officials seem intent on reaching an agreement before the end of August.”
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