DBRS Releases Commentary on U.S.-China Relations: Tariffs Accelerated, Negotiations Stalled

DBRS Inc. (DBRS) released a commentary titled “U.S.-China Relations: Tariffs Accelerated, Negotiations Stalled.”

U.S.- China relations deteriorated further with the USTR increasing tariffs to 25% on US$200 billion Chinese goods on May 10 and working on raising tariffs on all remaining imports from China. On May 13, China’s State Council announced retaliatory tariffs, increasing the 10% tariff rate on about US$60 billion of U.S. goods to 20-25%.

While a trade deal may eventually still come through, recent developments have changed dynamics between the two nations and both countries must now grapple with new approaches to competition and cooperation. The sudden tariff increase by the U.S. came in the middle of a two-day visit by the Chinese delegation. In a post-meeting interview, Chinese Vice Premier Liu discussed several points of contention that look unlikely to be resolved quickly.

Concerns over slowing growth and trade tensions could prompt the Chinese authorities to further monetary and fiscal easing. This could have negative implications for the future of public debt ratio and China’s rating.

The commentary titled “U.S.-China Relations: Tariffs Accelerated, Negotiations Stalled” is available at www.dbrs.com.

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