Graph of the week

Graph of the week

17-05-2019 | インサイト
The impact of the trade war is starting to show
  • Jaap  van der Hart
    van der Hart
    Equity Fund Manager
Source: Bloomberg, Robeco. Numbers are year-on-year growth rates of three-month averages

The China-US trade war is back on the agenda. While everyone awaited the announcement of a trade agreement, President Trump took to Twitter to reveal his plans to increase import tariffs from 10 to 25%. According to the US, China has reneged on its promises and this was the consequence.

He also threatened to impose the same 25% import tariff on another USD 300 billion of Chinese goods, in other words on all Chinese imports into the US. This is having direct consequences for the stock markets. The improved prospects for a trade agreement, which alongside the Fed’s policy U-turn were one of the reasons the market got off to a strong start this year, so this latest development is leading to market corrections.

The MSCI World Index, for instance, rose by 19% until the end of April and fell 3% in the first half of this month. For the Chinese equity market, the situation is more acute, as it rose 23% until the end of April, then dropped 6% in May.


Significant potential impact on economic growth

The direct impact on Chinese exports has been relatively limited so far. In 2018, Chinese exports to the US rose in line with global trade trends. It is possible that, in anticipation of introduction of the tariffs on 1 January this year, companies sent additional goods across the oceans.

Only in recent months have we seen the volume of Chinese exports to the US decline significantly – and more so than total Chinese exports and total US imports. The trade war is bad news for the Chinese economy. Economists expect the current measures to bring down growth by 0.3 to 0.5%, due to both weaker exports and a knock-on effect on investments.

If the 25% import tariff is imposed on all Chinese goods, the country’s GDP growth rate will slow further by around 0.8 to 1%. To compensate for this, the government would likely take the necessary stimulus measures because, as a state-run economy, China has a direct say in how companies and banks are run.

Unexpected ally

However, a not insignificant side-effect of this would be a further increase in the country’s debt levels – something China has become more careful about in recent years. But let's not get ahead of ourselves. Negotiations are underway and a deal is still possible. In any case, the Chinese have an unexpected ally: the New York Stock Exchange.

Trump looks to the stock market as a key benchmark for his economic policies, and the stock market has a clear preference for a trade agreement.


当資料は情報提供を目的として、Robeco Institutional Asset Management B.V.が作成した英文資料、もしくはその英文資料をロベコ・ジャパン株式会社が翻訳したものです。資料中の個別の金融商品の売買の勧誘や推奨等を目的とするものではありません。記載された情報は十分信頼できるものであると考えておりますが、その正確性、完全性を保証するものではありません。意見や見通しはあくまで作成日における弊社の判断に基づくものであり、今後予告なしに変更されることがあります。運用状況、市場動向、意見等は、過去の一時点あるいは過去の一定期間についてのものであり、過去の実績は将来の運用成果を保証または示唆するものではありません。また、記載された投資方針・戦略等は全ての投資家の皆様に適合するとは限りません。当資料は法律、税務、会計面での助言の提供を意図するものではありません。




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