According to a note by Chetan Ahya, Morgan Stanley's chief economist, retaliatory tariffs in the U.S.-China trade war is pushing the global economy to the brink of recession.
"If talks stall, no deal is agreed upon and the U.S. imposes 25% tariffs on the remaining $300 billion of imports from China, we see the global economy heading towards recession," the economist warned.
President Donald Trump hiked tariffs on $200 billion worth Chinese imports from 10 to 25 percent with effect from May 10. That invited China's retaliation and raised duties on $60 billion of U.S. goods to 25 percent from June 1. Trump is planning 25 percent tariffs on an additional $325 billion of Chinese goods "shortly."
"But, reactive policy response and the usual lags of policy transmission would mean that we might not be able to avert the tightening of financial conditions and a full-blown global recession," Ahya said. [...]
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