London 7 Feb (ANA) — The risk of an escalating trade war between China and the US is rising fast, analysts at Goldman sachs have reported. US President Donald Trump's trade advisor, Peter Navarro, proposed a blanket 45% tariff on all Chinese-made goods. And Goldman Sachs analysts Andrew Tilton and Alec Phillips said they saw "little reason to believe" that Trump would back down on imposing restrictions on Chinese imports such as on steel and machinery. "We believe the Trump administration is likely to make an announcement on China’s currency policy and impose unilateral tariffs on a number of products," the analysts said in a note to clients. "In general, we expect this administration to be much more active in using existing 'trade enforcement' tools than recent administrations." Goldman Sachs even produced a graphic of some of Trump's past quotes on trade and deal-making, to show how unpredictable he can be. The analysts pointed to the changing political "atmosphere" on trade, which would ease opposition to anti-China protectionist measures. Republican voters are becoming more sceptical about free-trade, paving the way for tariffs. Despite this, the Trump administration is unlikely to go straight to blanket tariffs. "Our expectation is that near-term activity is likely to be limited to targeted actions, with blanket tariffs held out as an additional tool that might be used later," the analysts said. That 45% tariff plan won't go down well among Chinese policymakers. In an interview with Goldman Sachs, Chinese trade expert Tu Xinqan, said it would start a full-blown trade-war almost instantly. "Of course, if a 45% tariff were imposed, it would trigger a trade war. China would definitely retaliate and would likely go above and beyond the US measures, potentially imposing tariffs as high as 80- 90% on imports from the US," he said. "That said, an across-the-board tariff of any size on US imports from China would be significant—certainly much more so than anti-dumping or countervailing duties on only specific products—and would require that China respond. China would not tolerate even 1% more in tariffs than what is imposed on other countries." Tensions are already building between China and the US on trade, and tariffs are rising. Earlier this year China increased anti-dumping tariffs on US imports of grains used in animal feed from 33.8% to as much as 53.7%. The country also hiked anti- subsidy penalties from 10% to as much as 12%, according to a Reuters report.(ANA) 

FA/ANA/7 February 2017------