[I-bank focus]Sino-US trade war alarming but manageable

    Macquarie Research said it remains very uncertain what shape the US administration's ultimate trade policy will take, and consequently what the economic and market implications will be, but the latest's announcement has made it
clear that China will be the focus.
  While today's escalation is alarming, the direct impact on both the Chinese and US economies of the new US measures remains manageable.
  The proposed US measures would impose 25% tariffs on a value of Chinese imports totalling US$50-60bn per year on current trade patterns. A product list will be developed near-term. Aerospace, machinery, and information communications technology are likely to be targeted.
  Final details could still change substantially following a public consultation which will take place over the next 1-2 months.
  Macquarie believes the direct effects of the tariffs on China should still be relatively
contained, affecting only 2.5% of total Chinese exports. Similarly, the proposed policy would be imposed on goods representing 2% of total US imports, with only small direct effects on growth and inflation. The research house also expects the effect on the US trade balance to be small. (KL0