Goldman Sachs warned in a note released on Sunday that they expect tariffs targeting the remaining USD 300B of US imports from China to go into effect on September 1. And, a trade deal between US and China is no longer expected before 2020 US presidential election. Also, it expects a 0.6% drag on the US economy while “fears that the trade war will trigger a recession are growing.” For Q4, Goldman Sachs lowered US GDP growth forecast by 20 basis points to 1.8% annualized.
The note added “overall, we have increased our estimate of the growth impact of the trade war”. Supply chain disruption could lead US companies to reduce their domestic activity. “The drivers of this modest change are that we now include an estimate of the sentiment and uncertainty effects and that financial markets have responded notably to recent trade news.”
Also, “relatedly, the business sentiment effect of increased pessimism about the outlook from trade war news may lead firms to invest, hire, or produce less.”
