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Goldman Sachs doubts trade war will end amicably soon

INTERNATIONAL bank Goldman Sachs lowered its fourth-quarter US growth forecast by 20 basis points to 1

Goldman Sachs doubts trade war will end amicably soon

INTERNATIONAL bank Goldman Sachs lowered its fourth-quarter US growth forecast by 20 basis points to 1

14 August 2019 - 19:00

INTERNATIONAL bank Goldman Sachs lowered its fourth-quarter US growth forecast by 20 basis points to 1.8 per cent as it no longer expects a trade deal between the world's two largest economies before the 2020 US presidential election, Reuters reports.

'We expect tariffs targeting the remaining US$300 billion of US imports from China to go into effect,' the bank said in a note.



US President Donald Trump announced on August 1 that he would impose a 10 per cent tariff on a final US$300 billion worth of Chinese imports on September 1, prompting China to stop purchases of US agricultural products.



The United States also declared China a currency manipulator. China denies that it has manipulated the yuan for competitive gain.



The yearlong trade dispute has revolved around issues such as tariffs, subsidies, technology, intellectual property and cyber security, among others.



Goldman Sachs said it lowered its fourth-quarter US growth forecast by 20 basis points to 1.8 per cent on a larger than expected impact from the developments in the trade tensions.



'Overall, we have increased our estimate of the growth impact of the trade war,' the bank said in the note from three of its economists, Jan Hatzius, Alec Phillips and David Mericle.



Rising input costs from the supply chain disruption could lead US companies to reduce their domestic activity, the note said.



Such 'policy uncertainty' may also make companies lower their capex spending, the economists added.


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