KUALA LUMPUR: Moody’s Investors Service warns the US's imposition of additional tariffs on US$200bil of Chinese imports will worsen global trading environment and add to global risk aversion.
Moody’s managing director and chief credit officer for Asia Pacific, Michael Taylor said the 25% tariffs on US$200bil of Chinese imports from the previous 10% “exacerbates the uncertainty in the global trading environment, further raises tensions between the US and China, negatively affects global sentiment and adds to risk aversion globally”.
He said in a statement on Friday the higher tariffs could also lead globally to the repricing of risk assets, tighter financing conditions, and slower growth.
“In addition, the trade tensions could result in an increasingly fragmented global trading framework; weakening the rules-based system that has underpinned global growth, particularly in Asia, over the past several decades.
“For China in particular, 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,” he said.
Taylor said the Chinese advanced technology sector would also likely be adversely affected, as the US intensifies restrictions on that sector.
“And for the rest Asia’s export-dependent economies, a slowdown in China will dampen growth rates.
“While we believe that a trade deal will eventually be reached between the US and China, the risk of a complete breakdown in trade talks has certainly increased,” he added.