US-China trade tensions enter a new phase
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Summary
Tensions between the United States and China have ratcheted higher since “Liberation Day.” We now believe the outlook for China's economy and currency has shifted away from our original base case and into our “protracted trade war” downside scenario. The growth outlook for China has materially worsened and tensions are likely to escalate through non-tariff barriers to trade; however, we maintain our view that Chinese authorities will not engineer an FX devaluation at any point during Trade War 2.0.
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