The end of a trade war between the US and China are seen
Moody’s believes the continued trade of conflict baseline, which will affect the world economy.
Analysts at Moody’s predict a continuation and toughening of the trade war between the US and China and the introduction by both parties of all the new measures. Trade conflict will have a negative impact on world economic growth, though the US and China basically will be able to overcome the negative impact on its economy. Moody’s expects the new measures in the course of the conflict, for example, the USA introduction of additional duties on all imported cars, or a serious revision of the North American free trade agreement (NAFTA).
According to a Tuesday report Agency Moody’s, tensions in trade relations between the US and China is likely to continue to grow in the second half and will have a negative, although giving correct impact on economic growth.
“We expect that the trade conflict between the US and China and other countries will continue and further measures in this area will be enacted in the remaining time of 2018. Now we believe that trade conflict will not stop until full implementation of the most severe potential measures mentioned so far, including tariffs on all imports of cars in the United States or the collapse of NAFTA,” — says Elena Duggar, head of the Board of Moody’s on macroeconomics and one of the authors of the report.
The authors of the report came to three main conclusions
The first of these is that the escalation of tension considered as a baseline scenario, it expects the continuation of the trade conflict and new measures with both sides. The second conclusion — the trade dispute will be a deterrent for the growth of the world economy. In addition, according to analysts, it will have significant implications for some industries and regions: industry, protected by import restrictions, will win and the industry to use expensive imported or local resources will suffer. The displacement of the chains will be expensive, will suffer most of Asia.
Companies that leverage global supply chain is likely temporarily reduce investment due to uncertainty about what measures will be taken in the framework of a trade war. All of this can lead to price changes, reduced efficiency and reduction in consumer confidence which will have a negative impact on the economy.
In July, the US and China have already imposed a 25 percent import duties on many goods, they account for 2% of U.S. and 3% of Chinese imports.