QuickScan: More Trade Tensions

Trade tensions have been ratcheting up again, as shown by our proprietary text-based China trade tension indicator. While still early days, this, along with recent increases in geostrategic risk, will likely introduce further uncertainty and may dampen business sentiment. These developments should therefore be watched closely. Nevertheless, we continue to believe that the more benign external factors discussed in our last QuickScan remain intact for now.    

Trade tensions have been ratcheting up again, as shown by our China trade tension indicator. The tensions revolve around a range of areas, including semiconductors, EV subsidies, brandy imports, biodiesel and others. Notably, the indicator has recently climbed to levels last seen at the early stages of the trade war with the US back in 2018 (see chart).