US–China Tensions: Goldman: Peaceful, Explosive
Investment bank Goldman Sachs warned that the latest tensions between the United States and China could yield a much broader range of outcomes than previous negotiations. In a research note released Monday, Goldman economists assessed that the two countries' latest moves are likely a strategy to strengthen their bargaining position ahead of this month's APEC meeting, but the ultimate outcome remains difficult to predict.
According to a team of economists led by Andrew Tilton, Hui Shan, and Lisheng Wang, there is a chance that the upcoming meeting could produce a positive compromise—including possible tariff reductions and export debt relief by both sides. China is also expected to pressure the US for greater concessions, such as tariff reductions and the easing of export controls, with an imbalance in the softening of its rare earths export policy.
However, Goldman also warned of the risk of a negative scenario, where both countries reimpose massive tariffs like earlier this year, or temporarily tighten export trade. If that were to occur, the impact would depress global markets and boost the economy.
The bank projects that the most likely scenario is that both sides refrain from the most aggressive policies and extend the tariff escalation pause agreed upon in May. In the coming days, investors will await an official statement from the White House and news on whether there will be a face-to-face meeting between Presidents Xi Jinping and Donald Trump on the sidelines of the APEC Summit.
Key Points:
Goldman Sachs views US-China tensions as part of strategic negotiations.
There is a chance for tariff reductions, but also new export trade risks.
The most likely scenario: an extension of the tariff pause and moderate policies.
The Xi-Trump meeting at APEC is a key factor for the market to await.
Global markets remain wary of the potential for unexpected policy changes. (asd)
Source: Newsmaker.id
