Moody’s: Risk of breakdown in US-China trade talk increases

Moody’s: Risk of breakdown in US-China trade talk increases

KUALA LUMPUR,. The trade tension between US and China is expected to heighten as the risk of a complete breakdown in trade talks has certainly increased, said Moody’s Investors Service.

Its managing director in credit strategy, Michael Taylor said the 25 per cent tariffs imposed by the US on US$200 billion (RM831.1 billion) worth of Chinese imports from the previous 10 per cent, exacerbates the uncertainty in the global trading environment and further raises tensions between the two economic superpowers.

“This has negatively affects global sentiment and adds to risk aversion globally,” he said in a statement today.

He added that the higher tariffs could also lead to the global repricing of risk assets, tighter financing conditions and slower growth.

“The trade tensions could result in an increasingly fragmented global trading framework; weakening the rule-based system that has underpinned global growth, particularly in Asia, over the past several decades,” he said.

For China, in particular, Taylor who is also the chief credit officer for Asia Pacific region also said the higher tariffs will have a significant negative effect on exports, against the backdrop of a slowing economy.

“Further policy easing will mitigate only some of the impact and increased uncertainty and weaker business sentiment will hinder private investment decisions and for the rest, Asia’s export-dependent economies, a slowdown in China will dampen growth rates,” he said. — Bernama