Analysts at Danske Bank point out that the Bloomberg wrote a story that the next step for the Trump administration is targeting China by imposing tariffs on Chinese imports and limiting Chinese investments in US businesses.
“It is not a surprise Trump wants to target China, as the US runs the largest trade deficit with China and the investigation of Chinese theft of intellectual property rights have been ongoing since August 2017. Still, it is noteworthy that the story is being more concrete than what we have seen before. For instance, in the most severe scenario, the US could impose tariffs on imports of Chinese-produced clothing and electronics, according to the story. On the investment side, the US may prohibit Chinese takeovers in sectors, where US companies cannot access the Chinese market. The investigation on China is expected in the coming weeks. As with tariffs on steel and aluminium, we expect any measures taken against China to be small in magnitude, meaning this is more about politics than economics. There is a risk we are being too optimistic and that we are heading for a full-blown global trade war, Research US: Symbolic protectionism with limited impact on growth and inflation but risks remain.”
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