Photo: Reuters/Brendan McDermid
Photo: Reuters/Brendan McDermid

The escalating US-China trade war has so far been shrugged off by a US stock market that continues to see valuations climb higher. But with the Trump administration threatening to slap tariffs on everything it imports from its largest trading partner, concern is finally brewing.

Both Goldman Sachs Group and JPMorgan warned in notes this week of potential danger posed to US corporations by a full-blown trade war with China, Bloomberg reported.

Goldman Sachs went so far as to say that, should the Trump administration slap 10% tariffs on all Chinese imports, the hit to earnings could lead to a bear market.

The calls come after UBS strategist Keith Parker warned last week that new rounds of China tariffs pose a threat to the resilience of US stocks.

The S&P 500 and Dow Jones Industrial Average both rebounded from early losses on Wednesday, after news that the Trump administration had sent an invitation for trade talks to Beijing.

Tariffs on US$200 billion in Chinese goods, in addition to the $50 billion already subjected to new taxes, were expected as soon as last week, but have yet to be imposed. President Donald Trump has threatened to increase the value of Chinese imports taxed to $517 billion, or around the total value of all shipments from the country.

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