JOHANNESBURG - Rating agency Moody's Investor Services said on Thursday that US trade tensions with China were more likely to deteriorate this year and will dampen global growth in 2019, while emerging market countries remain inherently vulnerable to the risk of capital outflows associated with tightening global liquidity.
This as the trade war between the world's largest economies escalated further when the US and China on Thursday enacted tariffs on U.S.$16 billion worth of imports each.
The US imposed 25 percent tariffs on another U.S.$16 billion of Chinese goods, affecting 279 Chinese products, including chemical products, motorcycles, speedometers and antennas. China responded immediately with 25 percent tariffs of its own on an equal amount of American goods, including chemical products and diesel fuel.
Last month, Washington imposed tariffs on U.S.$34 billion worth of Chinese goods ranging from drainage pipes to agricultural products and railway wagons, with Beijing retaliating with duties on the same amount of US products, including coal, petrol, vehicles, motorcycles and medical equipment.
Elena Duggar, chair of Moody's macroeconomic board, said that financial market volatility and reversals of capital flows away from emerging markets were to be expected amid tighter global financing conditions.