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Research Perspective Vol.85

The first half of July saw the U.S. moving from threats to actions by imposing tariffs on Chinese imports worth $34bn, with the Chinese authorities responding immediately with an eye for an eye tactic. Investors, despite the current tension, remain optimistic and perceive these moves as leverage for negotiation and not as an actual trade war, although the situation is critical. Meanwhile, U.S. threatened its counterparties with withdrawal from the World Trade Organisation and further tariffs, which provoked European Union’s warning about a $300bn retaliations in case the tensions further escalate. The U.K. is fighting its own war as the current...