6/3/2019, 10:31 AM (Source: TeleTrader)
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Goldman Sachs predicts global trade war escalation

Goldman Sachs Inc. has revised the possibility of an escalation in the trade wars between the United States, China and Mexico, media reported on Monday.

The bank, which previously said that there was a 40% chance of the US placing a new 10% tariff on the remaining $300 billion of Chinese imports, revised that figure to 60%. It also revised its assumptions of a tariff on all Mexican products and suggested that there was now a 70% chance that US President Donald Trump will impose duties on the first 5% of Mexican goods and a 50% chance that this will increase to 10%. It further increased the possibility of wide-ranging tariffs on cars being introduced this year from 25% to 40%.

In addition, Goldman said that while trade deals between the US, China and Mexico would represent a removal of tariffs, they were not expected until the end of this year or the beginning of next year. It also lowered its US GDP forecast for the second half of the year by roughly 0.5 percentage points to 2%, blaming the trade disputes for taking their toll on growth. The downside growth risks further prompted the bank to "sharply raise" its subjective probabilities for interest rate cuts from the Federal Reserve, although it noted that the outlook had not changed enough yet for cuts to become its baseline forecast.

Breaking the News / DZ