Goldman Sachs does not believe the world’s two largest economies will be capable of resolving their long-going trade dispute before the U.S. presidential election next year.
It comes shortly after the U.S. formally designated China as a “currency manipulator, ” amid quickly intensifying tensions between the two economic giants.
On Monday, the U.S. Treasury arrested Beijing of intentionally influencing the exchange rate between the yuan and the U.S. dollar to achieve an “unfair competitive advantage in international trade.”
The declaration followed a sharp drop in the yuan against the dollar, with the Chinese money breaching the 7 per dollar level for the first time since 2008.
Late last week, China promised to battle back after Donald Trump vowed to impose 10% tariffs on $300 billion worth of Chinese imports.
Analysts at Goldman Sachs, managed by Chief Economist Jan Hatzius, mentioned in an analysis note printed on late Monday that they’d anticipated this move.
“News since President Trump’s tariff announcement on last Thursday signifies that U.S. and Chinese policymakers are taking a tougher line, and we do not anticipate a trade deal before the 2020 election.”
In focusing on the roughly $300 billion worth of Chinese items that had not already been focused by American levies, the U.S. president overruled the adamant objections of almost his whole trade group, based on a report revealed by The Wall Street Journal on Sunday, citing individuals familiar with the matter.