Morgan Stanley On Tariff Shock: "Trade War Will Lead To A Meaningful China Slowdown"

By Chetan Ahya, chief Asia economist at Morgan Stanley

What a week this has been. Without a doubt, it was the most stressful week of my career in financial services. While we got a 'pause' on US reciprocal tariffs ex China, uncertainty remains high. For a macroeconomist, the issue is uncertainty weighing on corporate confidence, which can cause a material deceleration in capex and trade. To me, the lesson from the 2018-19 experience with tariffs is precisely that slowing capex and trade will be the key drags on growth, affecting all economies.