|Photo by: Gage Skidmore via Wikimedia Commons|
McCaughan, who serves as CEO at Principal Global Investors, an Iowa-based institutional asset-management company, said, “We may be brewing up for a trade war because of the mistaken way that many policymakers interpret the trade issues.”Seasoned asset manager James Patrick “Jim” McCaughan forewarns, during an interview with CNBC on August 8, that US and China may find themselves entangled in a trade war as many lawmakers tend to handle trade issues the wrong way.
He added that global investors will face a huge risk if ever a trade war erupts between the two nations.
As the US tries to deal with its trade deficits with China, the Trump administration seeks to tap more into the economy of China, its biggest trading partner.
Plans of imposing import tariffs and quotas surfaced when US President Donald Trump started his term. These triggered worries over a possible trade war.
The markets will suffer in case the US government will impose tariffs on steel, according to McCaughan. For the 63-year-old chief executive, such action “would be very bad news.”
US Secretary of Commerce Wilbur Ross said that President Trump will do something about the steel imports from China by carrying out “bold action.”
Control Risks, an “independent, global risk consultancy,” according to its website, published a report in February 2017 indicating that the Trump administration may only use limited economic action towards China.
If ever Trump will make China experience “severe and widespread economic pain,” according to the report, “legal, regulatory and legislative practicalities” will restrain him in doing so.
The US is likewise expected to honor the commitments it made with the World Trade Organization.
The consultancy warned that if ever Trump “pursues more unilateral and unconventional options” concerning its dealings with China, there will be a “high likelihood” that the Chinese government will retaliate.