US, China May End The Truce, That Won’t Prevent The Slow Down

The ongoing tariff war between China and United States may be close to a truce but that is not likely to slow down the downtrend in global economy say experts as the fight has already fractured financial markets and economy activity across the world. President Donald Trump announced on Twitter during the weekend that due to the progress made in discussion between representatives of both nations. He will delay imposition of any more tariffs on imports from China that was likely to set in by early March which was largely due to one-to-one meeting at Argentina between President Trump and President Xi Jinping in December.

Another meeting between both presidents is scheduled in Florida and will conclude the agreement if both nations make progress in the discussions. Though Trump has not announced any timeline for the meeting CNBC has reported that both countries would hold a summit in late March. Markets in Asia have reacted positively to this declaration but experts state that it is too early to make positive predictions as it would not stop global slowdown. Daiwa Capital Markets’ chief equity strategist stated that the economic cycle is in the phase wherein there is moderate growth in US economy but there is also risk of recession by middle of 2020.

He affirmed that downturn will not go away soon as they existing tariffs are not likely to be reduced immediately until something definite is discussed and signed. IMF had announced in January that global economy would grow at 3.5% this year down from its earlier projected figure of 3.7%. Recent data has also shown that slowdown has materialized as Purchasing Managers’ Index revealed weakness in economies of US, China, Germany and also Japan. It is not clear as yet if there will be reduction in restrictions by USA on technology related issues and if there will be change in its Huawei related statements.