25% auto tariffs could cause EU and Japan to slip into recession, hit the financial markets

01/23/2019

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Tay Peck Gek | Business Times

WHILE everyone’s attention has been focused on the trade tensions between the United States and China, there is another trade hot potato that warrants close monitoring.

The issue that should be on everyone’s radar is a possible 25 per cent tariff on car imports into the US from the Europe Union and Japan, said Stefan Hofer,¬†managing director and chief investment strategist at LGT Bank Asia. At a media lunch on Wednesday, he flagged the implications of the import duty if there is no trade deal between the US and its trade counterparts Japan and the EU.

He said that the duty – if levied – might cause Europe and Japan to go into recession, and will also be “extremely negative for financial markets”.¬†

He does not expect the 25 per cent tariff to materialise but should it happen, “this will probably cause recession in Europe and Japan”. Risky assets would be “substantially” weaker. The financial markets will not be spared either.

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