In last week’s edition of Asia Views, Goldman Sachs refer to a report by Alec Philips and Andrew Tilton in late January that highlights the Trump Administration’s Section 301 investigation into China’s industrial policies and technology transfer practices. They believe this investigation poses the biggest risk (for Asia) of a further escalation of trade conflict with a large economic impact – and which is not fully appreciated by many market participants. Should the US enact more substantial and broad-based barriers to Chinese trade or investment than seen to date, the current dispute could reach beyond trade by affecting investment and regulation. China could respond with retaliatory trade sanctions, actions against US companies operating in China, exchange rate depreciation, sales of US assets or shifts in posture on key geopolitical issues such as North Korea. Of these, Philips and Tilton think targeted trade sanctions against US exports of agricultural products or transportation equipment seem most likely. The USTR report is due in August but news reports suggest it will be released sooner. Goldman have been covering this topic extensively, and yesterday published another piece entitled: Global Economics Analyst: Trade Wars: The Big Picture. GS clients can read all of these notes on Goldman 360.