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Strike and counter-strike point to negotiation

​The Chinese response to the US announcement of 25% tariffs on $50bn worth of Chinese goods is less restrained than we expected.

We think it is mainly a negotiating tactic aimed at encouraging the US side to negotiate and thereby reduce the risk of an all-out trade war. Early pronouncements on both sides are consistent with this view.

However, we recognise that more restrictive trade policy will weigh on growth through its impact on world trade and business confidence.

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