- Global Trade War: Where Do we Stand Now? What Impacts?
Global Trade War: Where Do we Stand Now? What Impacts?
Wednesday 28 November 2018
Research / Market
A few days before the important meeting between U.S. President Donald Trump and Chinese leader Xi Jinping, it is important to have a clear view on the trade dispute between the two countries and on the potential impacts of a trade war.
In any case, 2018 will remain a landmark year, one that goes hand in hand with an increase in trade tariff measures and that marks the intensification of the trade dispute between the United States and countries such as China, Mexico and Canada in particular. As mentioned, it could also be the year that marks the beginning of a real trade war. We are not there yet, if we consider the current situation as being rather a war “United States against the rest of the world”, but also if one relies on the level of the increases of the tariffs, far removed from those prevailing in previous trade wars. Nevertheless, given the increased importance over the decades of the indirect effects of tariff increases (impacts on risk aversion, perception of the risk of a global trade recession but also of global growth, wealth effects linked the potential impact on the financial markets, lower confidence indices and therefore consumption and investment ...), there is already something to worry about, and all the more so that dominates the impression that D. Trump is not going to stop there.
US-China trade: continuing the talks while making the war
In our opinion, we should dismiss the idea that talks could breakdown, albeit uncertainties remain. On one side, in order to reach an agreement China wants the U.S. to remove all extra tariffs, set targets for Chinese purchases of goods in line with real demand, and ensure that the text of the deal is “balanced” to ensure the “dignity” of both nations.
Economic crisis and political risk batter Argentina. Way out or opportunity?
Argentina’s economic situation: The economy is facing severe stagflation. Monetary and fiscal policy are extremely tight, consumer and investor confidence is low, and inflation is proving very sticky amidst wage indexation.
Asset Class Return Forecasts - Q2 - 2019
Our medium-term baseline scenario is that of a late business cycle slowdown followed by a probable mild economic recession in the next three to five years.