NEW YORK: The US decision to more than double tariff on USD 200 billion Chinese imports to 25 per cent "exacerbates the uncertainty" in the global trading environment and could lead to tighter financing conditions as well as slower growth, Moody's Investors Service said recently.
"The 25 per cent tariffs imposed by the US on USD 200 billion of Chinese imports from the previous 10 per cent 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.
“The higher tariffs could also lead globally to the repricing of risk assets, tighter financing conditions, and slower growth," Moody's Investors Service Managing Director, Credit Strategy, Michael Taylor said.
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.
With regard to impact of duty hike on China, Moody's said it will have a "significant negative effect on exports", against the backdrop of a slowing economy.
