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Fire Stoked In US-China Trade War: How The Experts Are Reacting

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Fire Stoked In US-China Trade War: How The Experts Are Reacting

In a series of tweets over the weekend, President Donald Trump said ongoing trade talks with China are moving at too slow of a pace and many untaxed imports from China will soon be slapped with a new tariff rate of 25 percent.

What Happened

Existing tariffs on Chinese imports consist of 25 percent on $50 billion of high tech and 10 percent on $200 billion dollars of other goods, Trump said in a tweet. These payments are "partially responsible for our great economic results," he said. The 10-percent rate will move higher to 25 percent as early as Friday, Trump said. 

"The United States has been losing, for many years, 600 to 800 Billion Dollars a year on Trade," Trump followed up in a Tweet Monday morning. "With China, we lose 500 Billion Dollars. Sorry, we're not going to be doing that anymore!"

Buffett: OK To Act 'Half Crazy'

Trump and China may be engaged in a "dangerous game," but Trump's announcement of higher tariffs is the "rational" move to make, billionaire investor and Berkshire Hathaway Inc. (NYSE: BRK-A) (NYSE: BRK-B) CEO Warren Buffett told CNBC in an interview Monday morning. There are times when not only "tough" talk is needed, but a negotiator needs to act "half crazy," he said. 

If Trump follows through with his tough talk on tariffs, it would "mean a lot to the world" due to the globalized nature of the economy, Buffett said. Any impact on specific companies would depend on any future retaliatory actions — and if they're conducted on a major scale, the impact could be "huge over time," he said. 

Goldman Sachs Sees 'Slightly Lower' Likelihood Of Agreement

Ongoing trade talks between U.S. and China "might have reached a sticking point," but the likelihood of a near-term deal is only slightly lower, CNBC quoted Goldman Sachs analysts as saying in a research report. China is sending a trade delegation to the U.S. this week, and if it's successful, Trump's call to raise tariffs could be avoided, in the research firm's view. 

Goldman estimates the likelihood of lifted tariffs by Friday to be at 40 percent and said a resolution remains "reasonably likely," CNBC reported. Trump holds the necessary power to "walk the policy back" through an executive order, according to the report. 

Elsewhere On The Street

The following is a summary of what some of the other notable research firms are saying, according to CNBC.

Citi said the likelihood of a "trade war today, trade deal tomorrow" remains high unless China "walks away from the talks."

UBS said Trump is looking to "send a message" and looking to "increase leverage."

Raymond James said there is "some hope" trade talks could be "salvaged."

Oppenheimer said Trump's tariff talk is an "expression of frustration" and not "set in stone."

RBC Capital Markets said the latest developments are a "negative catalyst" for the market given investor expectations for a resolution to trade talks.

Morgan Stanley said any re-escalation could prove to be "temporary" and market weakness will aid in bringing the two sides back to the table.

Bank of America Merrill Lynch said stocks could be in for a "bumpy ride" before a trade deal is finalized.

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