US Tariffs: The Opening Salvo – TDS

Analysts at TDS note that the initial market reaction to the announcement of up to USD 60bn US tariffs against China has seen risk assets sell off and safe havens rally.

Key Quotes

“We are of the view that this is only the opening salvo in the US administration's efforts to reduce the record bilateral trade deficit with China.”

“China's retaliation to the announcement has been restrained as it has most to lose in the event of any escalation of trade tensions, but this will be insufficient to dampen market fears.”

“Any recovery in risk assets in Asia is likely to be shallow, as the makeup of the US administration has shifted towards an incrementally more hawkish and interventionist line up, pointing to more tariffs and protectionist measures in the months ahead.”