US: Trade war may be following a more diplomatic path - ING

Viraj Patel, Research Analyst at ING, notes that the topic of trade wars remains front-and-centre for global markets this week, especially after recent US trade policy announcements and the latest being a $50-$60bn tariff package on Chinese imported goods.

Key Quotes

“The implications for global markets now rest on how major trading partners choose to retaliate; Beijing’s response thus far has been the announcement of a $3bn tariff on imports from the US – though we note this is a response to US steel and aluminium import tariffs (and not the latest US tariff package on China). While weekend reports suggest that trade wars may be following a more diplomatic path – with the WSJ noting US and Chinese officials are quietly negotiating behind the scenes on ensuring ‘fairer’ trade – we still see good reason for investors to stay wary over the potential for an escalation in the current trade war dynamics. We look for the relief rally in global risk sentiment to be short-lived – with trade war headline risks elevated.”