A grim preview of a trade war takes shape
NEW YORK — In what could be a grim preview of what’s to come if the world’s two largest economies square off in a trade war, shares in multinational corporations were hammered Monday on both sides of the Pacific after a tweet from President Donald Trump.
That damage would almost certainly ripple outward and affect anyone who buys a refrigerator, a car, an iPhone, or anything else with a computer chip inside. Companies that import goods or parts from China may or may not pass on costs to consumers, but they usually act to offset rising costs somehow, including potential job cuts.
Goldman Sachs doubled the odds of auto tariffs are coming this year (to 20, and lessened the odds it gives to a free trade agreement between the U.S., Canada and Mexico.
“The President’s willingness to risk a market disruption by threatening an unexpected tariff hike suggests that he might also be willing to risk the disruption that formally proposing auto tariffs or announcing the intent to withdraw from NAFTA might cause,” Goldman Sachs said in research published over the weekend.