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.
A significant reduction in that uncertainty may be the only path to a brighter economic outlook. One way to that outcome could be deals which lead to lower tariffs, especially for China. But my reading of the cause for the tariffs is that the US administration is determined to eliminate the trade deficit and bring production onshore. That issue seems to define the opportunity and the challenge to successfully negotiated deals.
