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Fears of Recession Arising from Trade War with China Intensifying

08/15/2019

According to Reuters, three economists affiliated with Goldman Sachs Group, Jan Hatzius, Alec Phillips and David Mericle issued a statement including an opinion that resolution of the ongoing trade conflict will not occur in 2019 and that the U.S. will in all likelihood impose a 25 percent tariff on the remaining $300 billion of annual U.S. imports from China that are not subject to duty at the present time.

China announced that all imports of agricultural products from the U.S. would cease as a retaliatory response to the announcement that effective September 1st a 10 percent duty would be imposed on the currently non-tariffed $300 billion in imports to the U.S. The most recent announcement of a delay in imposing the duty will probably not elicit any positive response from China.

The Goldman economists have raised the possibility of a recession affecting all industrialized nations if the trade war becomes intensifies. They have also lowered the 4th quarter U.S. GDP growth forecast to 1.8 percent.