Goldman Sachs has revised up the possibility of sweeping auto tariffs being introduced this year to 40%, from 25% previously.
The Wall Street investment bank raised the possibility of the U.S. introducing a new 10% tariff on the remaining $300 billion of Chinese imports to 60%, from 40% previously.
Morgan Stanley chief economist says markets not fully prepared
Wall Street’s biggest banks lined up to warn investors of growing recession risks from the escalating trade war between the U.S. and China.
A global recession could start within nine months if President Donald Trump imposes 25% tariffs on an additional $300 billion of Chinese exports and Beijing retaliates, according to Morgan Stanley. Separately, JPMorgan Chase & Co. said the probability of a U.S. recession in the second half of this year had risen to 40% from 25% a month ago.
“Recent conversations with investors have reinforced the sense that markets are underestimating the impact of trade tensions,” Chetan Ahya, chief economist at Morgan Stanley, wrote in a report. “Investors are generally of the view that the trade dispute could drag on for longer, but they appear to be overlooking its potential impact on the global macro outlook.”