As the trade war between China and the United States continues, the ongoing tariff battle remains an important risk facing markets.
That will eventually fade once the two countries reach a provisional deal, according to a BNP Paribas economist, but they’ll leave behind a “cold tech war.”
American trade negotiators will soon head to China for face-to-face talks as the world’s two largest economies try to strike a deal, sources told CNBC.
“We’re likely to get a temporary agreement in the coming months,” said Chi Lo, senior economist at BNP Paribas. He told CNBC’s “Street Signs” on Friday that if Beijing and Washington can agree to a temporary deal then they can “set the stage for longer-term negotiation on more deep-rooted issues.”
U.S. President Donald Trump has been using tariffs as a tool to address issues beyond trade, including national security issues and technology transfer threats.
Lo said, given his expectation of a temporary pact, the continued trade war will no longer have such a big impact on “the macro risk in terms of market volatility,” in the coming months.
But the affect of the trade dispute will linger on and hurt tech, Lo said. He predicted that disagreements in the technology sector will probably get even “colder” in the coming months — or even coming years.
“There will be more focused trade war risk on the tech sector going forward. But then the overall market sensitivity to overall trade war risk may fade a bit,” said the economist.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.