US: Trade tensions again escalates with China – TD Securities

TD Securities analysts note that the US President Trump has announced that the US will impose 10% tariffs on the remaining $300bn of Chinese imports that are not yet subjected to tariffs starting on September 1st.

Key Quotes

“Late in the day, he stated that the 10% tariffs could go beyond 25%. This move escalates trade tensions following the truce at the G20 and is reminiscent of the sharp increase in tariff uncertainty in May. The announcement follows high-level meetings held this week in Shanghai which have not advanced at the desired pace by the US administration despite apparent "positive dialogue".”

“The increase in tariffs follows the 25% tariffs imposed on $250bn of Chinese imports on May 5. Given that these imports are more consumer-oriented, we expect a larger impact on US growth and inflation, compared to previous tariff hikes.”