Summary
U.S.-China trade tensions are again front and center following the developments of late last week. China’s plan to impose strict export controls, especially on rare earth minerals, were matched by new tariff threats from President Trump. While rhetoric eased this past weekend, a November 1 target date for the imposition of Chinese export restrictions and higher U.S. imposed tariffs elevate the probability of the U.S. and China slipping into a downside trade war scenario. In the context of U.S.-China tensions, mid-October to November 1 is a lot of time with many potential twists and turns along the way. In that sense, we updated our U.S.-China Trade War 2.0 scenarios for how China’s economy and currency could perform should relations deteriorate, improve, or hold steady. For now, we believe the U.S. and China will remain in our “restrained trade war” base case scenario, although risks are tilted toward our downside scenario materializing.
![Pinterest](https://pinterest.com/pin/create/button/?url=https://www.actionforex.com/contributors/fundamental-analysis/615386-u-s-china-trade-war-2-0-scenario-analysis-update/&media=https://www.actionforex.com/wp-content/uploads/2019/04/f-us-china-93.jpg&description=U.S.-China trade tensions are again front and center following the developments of late last week. China's plan to impose strict export controls, especially on rare earth minerals, were matched by new tariff threats from President Trump. While rhetoric eased this past weekend, a November 1 target date for the imposition of Chinese export restrictions and higher U.S. imposed tariffs elevate the probability of the U.S. and China slipping into a downside trade war scenario. In the context of U.S.-China tensions, mid-October to November 1 is a lot of time with many potential twists and turns along the way. In that sense, we updated our U.S.-China Trade War 2.0 scenarios for how China's economy and currency could perform should relations deteriorate, improve, or hold steady. For now, we believe the U.S. and China will remain in our "restrained trade war" base case scenario, although risks are tilted toward our downside scenario materializing.){kind=link}