How Will China React To Tariffs?
Article from Fox Business by Leia Klingel.
The threats of a trade war have hit markets and investor risk sentiment in recent weeks. While the tariffs could put some near-term pressure on companies, over the longer term the U.S. has the upper hand in this battle. But, according to Melius Research, if things don’t go well, the saber-rattling could double the risk of a recession.
“No one seems to want to risk free trade, but behind the scenes many of our CEOs are supportive of some action to level the playing field,” according to notes from Melius.
Melius believes it is likely that the U.S. and China will come to some sort of trade compromise but noted that the risks of a recession are higher now, due to the latest policy developments.
In the near term, tariffs add risk and lowers price-to-earnings (P/E) ratios, while in the longer term the tariffs will either drag the world into a recession or will be resolved to get the cycle back on its upward trajectory.
Read the entire article at Fox Business.
Image Credit: By Michael Vadon (Own work) [CC BY-SA 4.0 (https://creativecommons.org/licenses/by-sa/4.0)], via Wikimedia Commons