New US Tariffs Will Test China’s Ability To Sustain Its Economy: JP Morgan

Reportedly, new US tariffs slapped on Chinese goods can deal another blow to Beijing and it is not clear how much the Asian economic giant can do for maintaining its financial system, an economist at J.P. Morgan stated. As the ongoing tariff battle amid Beijing and Washington started a year ago, Chinese officials have used fiscal and monetary policies to restrict the economic damage caused by raised U.S. tariffs. Those steps have worked to some level, as per to Bruce Kasman, Head of Global Economic Research and Chief Economist at the investment bank. He said to CNBC, “I think it is motivating to see they have been moving on several fronts, it is encouraging to watch that it is having some consequences on the economy.”

He further added, “But, we just have not seen how far the new damage would be. I feel we have an increased risk of a slump. The reason we feel is that we are seeing the strengthening of the big drag in the international economy this year.” Earlier in this month, President Trump announced that from September 1, an additional 10% tariff would be slapped on $300 Billion of Chinese products. But the USTR (United States Trade Representative) office afterward eliminated some items from its list of aimed goods and postponed the execution of new tariffs on some goods until December 15.

On a related note, trade war’s losers might include energy, banks, and microchips. Looking across the stock market, it is difficult to find a firm that is not vulnerable at some level to the U.S.-China trade war. The stocks of firms that do a huge amount of business with China, such as chip manufacturers and other technology firms are apparent candidates for financiers to sell when trade worries surge. They have declined more than the rest of the market at any time President Trump tweeted or spoke about tariffs.

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