After a relatively calm weekend following the initial round of US tariffs and China’s response on 6 July, the Trump administration released an official list of a further $200bn of Chinese imports and analysts at Nomura view this as a significant escalation in the US-China trade dispute.
Key Quotes
“We expected some response in the wake of China’s reaction to the first round of US tariff increases. However, the release of this list, only four days after the initial round of tariffs took effect, indicates that trade protectionism may escalate beyond the initial round of tariffs imposed last week.”
“The new list, targeting $200bn with a 10% tariff, is almost equally split between capital and consumer goods. Thus, if these tariffs do indeed take effect, there would likely be a larger impact on consumers than in the initial round.”
“While the number of products targeted in the new list is substantially higher than in the initial round, the impact on inflation will likely be muted, in our opinion.”
“The impact on business confidence and financial conditions, however, could be larger. These developments do pose some downside risk to our forecast.”
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