US & China on Brink of Trade War, Says Goldman Sachs

US & China on Brink of Trade War, Says Goldman Sachs

The risk of an escalating trade war between the world's two biggest economies – the US and China - is growing fast, warn analysts from Goldman Sachs as cited by Business Insider.

Goldman’s Andrew Tilton and Alec Phillips said in a note to clients they saw "little reason to believe" US President Donald Trump would back down on imposing restrictions on Chinese imports such as steel and machinery.

Trump has repeatedly criticized China's trade practices and threatened to impose punitive tariffs on the country’s imports. He argued many Chinese policies were unfair, pointing to Beijing’s currency manipulation, theft of trade secrets, hacking, lax labor and environmental regulations. 

Trump’s trade advisor Peter Navarro, a hard-line critic of China, has recently proposed a blanket 45 percent tariff on all Chinese-made goods.

"We believe the Trump administration is likely to make an announcement on China’s currency policy and impose unilateral tariffs on a number of products," Goldman analysts said. "In general, we expect this administration to be much more active in using existing 'trade enforcement' tools than recent administrations."

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