The US-China trade war is the key problem for global growth, says economist
S&P Global Ratings' estimated tariffs led to a 25 basis points affect on growth in both the U.S. and China, Gruenwald said. He added that the "somewhat nebulous confidence affect" seems to have a "bigger drag on growth" than tariffs.
Washington and Beijing have been caught in a protracted trade war since early last year, and the next tariff deadline is Dec. 15.officials in Beijing say they don't anticipate sitting down to discuss a "phase two" deal before the U.S. election,And if the two sides cannot pen a deal by mid-December, additional U.S. levies on Chinese exports will go into effect.
" – that one is going to be different because the first couple of rounds were in capital goods. So, the supplier can take a hit or somebody in the supply chain can take a hit, which push prices up a little bit," he said. "If it's consumer goods, and all of a sudden its your iPhone in your pocket that is 15% to 20% more, that hits the consumers directly, that's got a political element as well," said Gruenwald.
Overall, the economist said that investors shouldn't worry about a slowing growth rate for China. The bigger problem to worry about is the uncertainty looming over the U.S.-China trade relationship that has an affect on each of the economies as well as global growth and the issue is unlikely to be resolved any time soon.
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