July 12, 2018

The tit-for-tat trade war between the United States and China is not likely to cause a recession, according to MKM Partners, a Wall Street equity research and trading firm.

The growing conflict between two of the world’s largest economies is not enough to spark a major downturn because that can only start when demand declines from consumers and businesses, wrote MKM Chief Economist Michael Darda.

“The tariff tit-for-tat between the U.S. and China continues to escalate. Yet, markets have essentially shrugged off the consequences,” Darda wrote to his clients. “The market understands that recessions (at least in the U.S.) have always been associated with demand shocks not supply shocks.”

Read more:

https://www.cnbc.com/2018/07/12/mkms-trumps-tariffs-are-unlikely-to-cause-a-recession.html