New U.S. tariffs on Chinese goods could deal another blow to the Asian economic
giant — and it’s not clear how much more Beijing can do to prop up its economy,
an economist from J.P. Morgan said on Friday.
Since the ongoing tariff fight between Washington and Beijingstarted about a year ago, Chinese
authorities have used both monetary and fiscal policies to limit the economic
damage brought on by elevated U.S. tariffs. Those measures have worked to some
extent, according to Bruce Kasman, chief economist and head of global economic
research at the investment bank.
“I think it’s encouraging to see they’ve been moving on multiple
fronts, it’s encouraging to see that it’s having some effect on the economy,”
he told CNBC’s “Squawk
Box.”
“But boy, we just haven’t seen how far the latest damage is going
to be,” he added.
U.S.
President Donald Trump earlier this month announced that
from Sept. 1, an additional 10% tariff will be applied on $300 billion of
Chinese goods. But the United States Trade Representative Office later removed some items from its list of
targeted goods, and delayed the implementation of new tariffs on some
products until Dec. 15.
Nevertheless,
many economists have said additional tariffs on Chinese goods imported by the
U.S. will hurt China’s economy. Growth has already slowed down in China, with
Beijing saying gross domestic product expanded by 6.2% in the second quarter of
this year — the weakest rate in at least 27 years.
Global recession risk
Growing
U.S.-China tensions, and slowing Chinese and European economies are among the
largest risks to global growth in the near term, several economists have said.
Those stresses in the world economy could spill over to the U.S., according to
Kasman.
Worries
about risks outside the U.S. prompted the Federal Reserve to cut interest rates
in July. Investors have also become
increasingly concerned about a potential looming recession.
Kasman
said there’s a 40% chance of a global recession in the next six to nine months.
“I
think we have a heightened risk of recession. I think the reason is that we’re
seeing the intensification of the big drag in the global economy this year: The
falling business confidence related to geopolitical concerns, particularly
trade conflicts,” he said.
Source: CNBC