US China Tariffs Update – September 2018

Recent tariff announcements are a modest negative for growth in US and China although Chinese policy will look to offset the impact.

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Overview:

  • Recent tariff announcements are a modest negative for growth in US and China although Chinese policy will look to offset the impact.
  • If markets remain calm and the tariff war does not escalate further, particularly to other countries, the impact should be contained.
  • US-China tariffs are a negative for the AUD but threatened future actions are largely already priced in.
  • For interest rates, as we expect a modest economic impact we have not changed our forecasts – we still see the US Federal Reserve lifting their funds rate further and in time the RBA following with a higher cash rate – there are both upside and downside risks to our rates forecasts.

For further details please see the attached document: