Goldman sees long trade war

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For what it is worth given how wrong it has been on everything surrounding the US economy:

New tariffs on all imports from China, some additional non-tariff restrictions, and no deal until late 2019….While there is still a clear possibility that a meeting between Presidents Trump and Xi at the G20 summit on June 28-29 could avert further escalation, we believe the probability has risen that the next round of tariffs will take effect and we now view this as the base case (60% probability).

The probability of this next round has risen, in our view, because both sides continue to escalate the dispute with increasingly confrontational rhetoric and new forms of non-tariff retaliation. Moreover, while we believe that both sides would ultimately like to reach an agreement, neither side appears to be under much political pressure to do so at the moment. That said, we continue to expect that President Trump will want to announce some type of agreement with China to lower those tariffs by late 2019 or early 2020. This would allow consumers—and likely equity markets—to benefit prior to the 2020 presidential election.

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.