Friction between Trump and China “likely”

Donald_Trump_press_conferenceThe Trump administration appears to be preparing tariffs or other punitive measures on Chinese imports to the US, according to a leading economist. Although Aidan Yao, an economist at Axa Investment Managers, says “an all-out trade war is a low-probability event”, these “greater trade frictions are looking increasingly likely” and will be detrimental to both parties. “Recent rhetoric from the US has turned more hawkish relating to imminent 'punishments' of Trump on China’s 'unfair' trade practices,” said a statement by Yao, who refers to speculation that possible punitive measures will be announced at Trump's State of the Union Address on January 30. China's State Administration of Foreign Exchange has denied rumours it would respond to tariffs by selling or cutting purchases of US government bonds. However, Yao speculates that the rumours were themselves spread by the Chinese authorities as a reminder of China's power to affect the cost of US borrowing. “If Trump does introduce something quite damaging (for China, but also the US, economy), China has promised to retaliate,” said Yao. ©2018 funds global asia

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