Market risks from trade war will fade but the ‘cold tech war’ will continue - BNP Paribas

As the trade war between China and the United States continues, the ongoing tariff battle remains an important risk facing markets.

That will eventually fade once the two countries reach a provisional deal, according to a BNP Paribas economist, but they’ll leave behind a “cold tech war.”

“We’re likely to get a temporary agreement in the coming months,” said Chi Lo, senior economist at BNP Paribas. He told that if Beijing and Washington can agree to a temporary deal then they can “set the stage for longer-term negotiation on more deep-rooted issues.”

Lo said, given his expectation of a temporary pact, the continued trade war will no longer have such a big impact on “the macro risk in terms of market volatility,” in the coming months.

But the effect of the trade dispute will linger on and hurt tech, Lo said. He predicted that disagreements in the technology sector will probably get even “colder” in the coming months — or even coming years. “There will be more focused trade war risk on the tech sector going forward. But then the overall market sensitivity to overall trade war risk may fade a bit,” said the economist.