As the second half of 2018 gets under way, trade frictions appear to be escalating and geostrategic tensions have intensified with Washington threatening to curb Chinese investment in US technology firms, points out the research team at ANZ.
Key Quotes
“Given China’s Belt and Road and Made in China 2025 initiatives, a protracted Sino-US trade dispute cannot be ruled out. Gradually, evidence is building that US trade policy is weighing on economic sentiment and activity. Initially, this was most apparent outside of the US. However, anxiety amongst American businesses is growing. Fifty-one US trade groups and the US Chamber of Commerce have petitioned Capitol Hill asking that Congress pass any future tariffs Trump imposes under National Security concerns.”
“The announcement by Harley-Davidson that it will move part of its production to Europe in response to retaliatory EU tariffs was telling. Agreeing a framework to discuss US trade concerns is a necessary condition in stabilising business and investor confidence and ensuring the current trade “spat” does not translate into a more meaningful dispute. Extended trade tensions have negative implications for investment and employment whilst financial markets have experienced heightened volatility in recent days as result.”
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