Stefan Koopman

The proposed U.S. tariffs on Chinese imports would certainly disrupt the internationally sliced-up value chains. It is well-known that large U.S. high-tech corporates and retailers use relatively cheap Chinese labor to assemble their products and gross trade flows analyses may underestimate the disruptive impact, raising tariffs on final and intermediate products that are shipped to the U.S. will crank up domestic prices for U.S. consumers and producers. As such, if these tariffs come through, it would provide another shock to the stock market and hurt producer and consumer confidence.

We do expect business investment to pick up as the tax overhaul does provide some welcome incentives, such as the immediate expending of business investment, but we don't expect any miracles on that front.

The inflationary pressures are definitely stronger than most had anticipated earlier this year, but there are some very good reasons to wait this out until the global economy fully recovers from the pandemic and its aftershocks.