Will US-China trade face off lead to recession?

Containers are seen at Yantian port in Shenzhen

Containers are seen at Yantian port in Shenzhen

Goldman Sachs Group Inc. stated on Sunday that fears of the U.S.

Goldman Sachs, therefore, lowered its projection for USA economic growth in the fourth quarter by 20 basis points to 1.8 percent, citing larger than previously anticipated impact from the trade tensions.

Goldman Sachs Group economists said on Sunday that there are increasing fears about the trade war between the U.S. and China leading to a recession, Reuters reports.

"The drivers of this modest change are that we now include an estimate of the sentiment and uncertainty effects and that financial markets have responded notably to recent trade news", said Jan Hatzius, Goldman Sachs' chief USA economist in a note to clients.

"We have increased our estimate of the growth impact of the trade war".

U.S. shares finished lower on Friday after U.S. President Donald Trump said that Washington was continuing trade talks with Beijing, but that the U.S. was not going to make a deal for now.

"We expect tariffs targeting the remaining $300 billion of United States imports from China to go into effect", the bank said in a note sent to clients.

The US investment bank said it no longer expects a trade deal before the presidential election next year as threatened new tariffs take effect. China allowed its currency to weaken, crossing the 7 yuan-per-dollar threshold, making that country's products cheaper on the worldwide market, while also announcing it would halt imports of agricultural goods from the US.

Trump slapped the additional tariffs despite opposition from practically all of his top advisers.

Goldman Sachs' latest estimate echoes one it made August 6 when it came to practically the same conclusion. Trump's new 10 percent levy he announced July 31 also figured prominently in Goldman's downbeat assessment.

Despite the risks, a crisis of the magnitude seen during the previous recession "would be a great surprise", Summers said. A weaker yuan makes Chinese goods cheaper on the global market, though the Asian economic giant denied that it manipulated the currency.