The trade war issue is getting quite complicated because since the US is in that situation where many economists are predicting another great recession. Now recently one of the largest credit rating agency firms Morgan Stanley said that the Fed might not cut interest rates even if a trade war between US-China gets worse. Morgan Stanley released their exclusive report called “Beyond the G20” in which they have mentioned worst-case scenario of the trade war.
Some analysts from Morgan Stanley think if the situation gets worse between US-China then even in 2020 Fed might not cut rates of interest. The US government and federal reserves are on the opposite side because both of them have a different opinion about this ongoing geopolitical situation. In this report of Morgan Stanley analysts predicted that If Fed doesn’t cut rates of interest, then S&P 500 would be down by nearly 5000 points or 17% of its total value. The great recession which happened in 1929 sank US economy entirely, and it took more than two decades for businesses to get out of that situation.
Many economists are not appreciating that Trump’s decision of putting more than 25% of taxes on Chinese goods is not a good move because it has increased the political tension between these two countries. The retailing, manufacturing and tech industry in the united states of America is already losing its value. Many big companies who are dependent for their supply of goods from China are losing their value. Recently all major retailing companies have come together and signed a letter to Donald Trump to top this trade war. The rate of unemployment is also increasing at a faster rate, which means jobless youngsters are growing every single day because of this dire geopolitical situation. Now since Morgan Stanely has predicted that things might get worse because of non-action from Feds side, many experts are just waiting to see what’s going to happen next.
