From US-China trade ceasefire to US-EU trade war? – Danske Bank

Anil Panchal FXStreet

Analysts at Danske Bank anticipate the market’s focus to shift to the US-EU trade war from the US-China tussle. Though, they don’t expect major noise from the trade jitters.

Key quotes

"We expect the US administration's trade policy to shift focus to Europe in 2020, but do not expect a wider EU-US trade war."

"EU’s retaliatory response - which we expect to come relatively swiftly in the event - could well see Trump’s move backfire."

"We see a 30-40% probability of US tariffs on European car imports hitting in H1 20, in light of both political and legal complexities. In the event of car tariffs, we see downside risks to the euro area and German GDP growth of 0.1-0.2%."

"We still see a tangible risk of further US tariff measures for EU products under the ongoing Airbus-Boeing dispute in the coming months, while progress on an EU-US deal on industrial goods is set to remain sluggish."

"Should the US impose tariffs, we would expect European yields to take a leg lower towards levels seen in H2 19 and European equities to suffer."

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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