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Trade war could usher in global recession

An analyst says a trade war with China could usher in a global recession, setting back commodity prices even more.

Global Commodity Analytics president Mike Zuzolo tells Brownfield a lot of negativity has been factored into the market.  But if tariffs remain in place by the July 6th deadline, further downward pressure is likely.

“I wouldn’t exclude the idea of soybeans going back down towards our 2009 levels when they made (new) lows at the height of the financial crisis.”

On the other hand, Zuzolo says there’s a lot of upside potential should a trade war be averted.

“If we get back to normalized trade with China and get a NAFTA deal signed this summer, we have a nice short-covering rally potential ahead of us.”

In the event of a trade war, he says history suggests it will take a long time to unwind the damage.

 

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