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Goldman Sachs has revised upward its expectations of an escalation of US trade wars with China and Mexico.
The United States now has a 60% chance to impose a new 10% tariff on the latest imports of 300 billion Chinese dollars, said Monday a note from the Wall Street investment bank. . This is an increase from a previous estimate of 40%.
Last month, US President Donald Trump announced that tariffs on Chinese goods worth $ 200 billion would increase from 10% to 25%. Washington has now begun to determine whether $ 300 billion of other Chinese imports would be subject to tariffs.
Goldman also revised its pricing assumptions on all Mexican products, suggesting that there is now a 70% chance that President Donald Trump will charge duties on the top 5% Mexican products and 50% chance that this rate will to 10%.
Trump recently threatened Mexico with imposing 5% tariffs on its imports, to be implemented on June 10, unless this can stem the flow of migrants to the US southern border.
"Additional price increases or an overall car fare are also possible, but not our base scenario," said the analyst team headed by Jan Hatzius. Goldman has revised the possibility of drastically introducing the car tariffs introduced this year, from 25% to 40% previously.
Although the agreements with China and Mexico are expected to result in tariff elimination, this should not happen before the end of 2019 or in 2020.
The note predicted that the intensification of the trade war between the two largest economies in the world, as well as emerging tensions between the United States and its southern neighbors, could weigh heavily on growth.
Goldman analysts have lowered their GDP forecast for the second half by 0.5 percentage point to 2%, but growth is expected to return at a moderate pace in 2020, as tariffs decrease and financial conditions stabilize. "
Risks to growth mean that Goldman has "significantly increased" his subjective probabilities of interest rate cuts by the Federal Reserve.
"But if it is a tight decision, the outlook has not yet changed enough for the cuts to become our baseline forecast," the note adds.
Analysts have acknowledged that with a "moderate tightening" of financial conditions, satisfactory growth and inflation exceeding 2%, a rate cut might seem "excessively political given President Trump's glaring demands for". 39, an easier policy ".
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