This Means Trade War

U.S. President Donald Trump’s threat of increased tariffs on Chinese goods is an indication that U.S.-China trade negotiations “might have reached a sticking point,” Goldman Sachs said on Sunday. The bank said in a note that chances of a successful deal are now lower, but suggested that an increase in tariffs could still be avoided — especially if the Chinese delegation still attends its meeting with U.S. negotiators this week.

Referring to Trump’s latest gambit, Goldman economists said: “This represents a shift from the optimistic statements from US officials over the last few weeks and suggests that the probability of a near-term agreement is at least slightly lower than it seemed to be recently.” U.S. officials had claimed in recent weeks that trade talks were going well, and sources had told CNBC that a deal was possible by this Friday. But major sticking points were said to remain, such as intellectual property theft and a disagreement as to whether tariffs should remain in place as a way to ensure Beijing sticks to its commitments.

Trump said in a Sunday afternoon Twitter post that the current 10% tariffs on $200 billion worth of Chinese goods will rise to 25% on Friday. He also threatened to impose 25% levies on an additional $325 billion of Chinese goods “shortly.”

Goldman Sachs: Here’s what could happen next with the US-China trade war, CNBC, May 06