Goldman Sachs economists say fears increase that US-China trade war leads to recession

(Reuters) ̵[ads1]1; Goldman Sachs Group Inc said on Sunday that fears of the US and China trade wars leading to a The recession is mounting and Goldman no longer expects a deal between the world's two largest economies before the US presidential election in 2020.

"We expect tariffs targeting the remaining $ 300 billion in US imports from China to come into effect," he said. bank in a note sent to clients.

U.S. President Donald Trump announced on August 1 that he would impose a 10% duty rate on a final value of $ 300 billion of Chinese imports on September 1, prompting China to halt purchases of US agricultural products.

The United States also declared China as a currency manipulator. China denies that it has manipulated the yuan for competitive advantage.

The years-long trade conflict has revolved around, among other things, tariffs, subsidies, technology, intellectual property and cyber security.

Goldman Sachs said that it lowered the US growth forecast in the fourth quarter by 20 basis points to 1.8% on a larger effect than expected from the development in trade tensions.

"Overall, we have increased our estimate of the growth effect of the trade war," said the bank in the note author of three of their economists, Jan Hatzius, Alec Phillips and David Mericle.

Rising entry costs from supply chain disruption may cause US companies to reduce their domestic activity, the note states. Such "political uncertainty" could also cause companies to reduce their capital expenditure, economists added.