Recession Fears Rising Over Continued Trade War Tension, Goldman Sachs Says

Goldman Sachs economists say fears rise that U.S.-China trade war leading to recession

Goldman Sachs economists say fears rise that U.S.-China trade war leading to recession

Goldman Sachs, therefore, lowered its projection for USA economic growth in the fourth quarter by 20 basis points to 1.8 percent, citing larger than previously anticipated impact from the trade tensions.

The trade war with China has a greater than expected effect on the USA economy, increasing the risk of a recession, Goldman Sachs warned on Monday.

"We expect tariffs targeting the remaining $300bn of United States imports from China to go into effect", said Goldman. Solomon conceded the ambit of America's economy is retarding a bit and that the intensifying US-China trade war has the possibility to engender problems.

Earlier this month, Trump announced that he would impose a 10% tariff on an additional $300 billion of Chinese goods to the USA from September 1, a move that prompted China to respond by suspending purchases of US farm products. Trump's administration fired back within hours by labeling China a currency manipulator.

China denies that it has manipulated the yuan for competitive gain.

The year-lengthy trade dispute has revolved around points such as tariffs, subsidies, expertise, intellectual property, and cybersecurity, among others.

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The Chinese also seem to be content to wait until after the 2020 US presidential election for an end to the trade war under a Democrat president.

"The drivers of this modest change are that we now include an estimate of the sentiment and uncertainty effects and that financial markets have responded notably to recent trade news", Hatzius said of the lower growth forecast.

The firm is expecting the new round of tariffs to go through in September and it no longer expects a trade deal before the upcoming 2020 election.

Rising input costs from the availability chain disruption may lead US companies to reduce their domestic activity, the note stated.

'The policy uncertainty effect may lead firms to lower capex spending as they wait for uncertainty to resolve. It again said it no longer expects a trade deal between ongoing U.S.

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