Maximum US Tariffs on China | Crypto’s Trump Card | Immigration and Public Finance | Private Credit Trilogy | European Insurance Conference

Welcome to the latest edition of Essential Economics! Our focus on the new US administration continues. Asia Pacific Chief Economist Louis Kuijs and a team of senior credit analysts look at an unlikely (in our view) scenario where the US imposes a 60% tariff on all Chinese imports - the impacts are not pretty. On DeFi, Andrew O’Neill and Lapo Guadagnuolo write that the U.S. election results will likely shift the legislative and regulatory environment for crypto, including the possibility of a bitcoin reserve fund. Sarah Sullivant and Nora Wittstruck examine the potential implications that proposed changes in federal immigration policy could have on some public financial entities. Turning to private credit, Ruth Yang and Evan Gunter led a team that published a trilogy assessing how private credit is extending into the markets for asset-based and project financing funding. Finally, we tee up our 2024 our European Insurance Conference, which takes place in London on November 27.

Maximum US Tariffs on China

President-elect Trump has proposed applying a 60% tariff on all Chinese goods imported to the U.S. We view this as an unlikely, maximalist scenario that would have steep consequences for the Chinese economy and an array of sectors. In this thought exercise, led by Louis and senior credit analysts, we find that the stakes are high, and the impacts would be severe (see infographic below). ?

In this analysis, we do not consider the response of the Chinese government, which could implement a targeted stimulus or other countermeasures to ease the pain.

To read the full report, click here.

Digital Assets Brief: Crypto’s Trump Card

Andrew and Lapo write that the U.S. election results will likely shift the legislative and regulatory environment for crypto.??With the caveat that campaign rhetoric doesn't always translate into policy actions, these developments may accelerate blockchain innovation in financial markets and could increase predictability for crypto businesses.

A proposed bill to build a strategic bitcoin reserve already shifts the narrative for that asset, even if the proposed bill's prospects are unclear.

To read the full report, click here.

Immigration and US Public Finance Creditworthiness

Sarah and Nora note that a proposed change in federal immigration policy could put financial pressure on some public finance sectors, but that tighter border policies could also relieve some costs for governments. The latter would be true for those governments that experienced higher social service expenditures to support new arrivals entering the U.S. during the past few years.

Significant uncertainty remains around the timing, magnitude, and implementation that complicate making cost or economic projections.

To read the full report, click here.

Private Credit Trilogy

Ruth and Evan led a team publishing a trilogy of reports assessing how private credit is extending into the markets for asset-based and project financing funding. Our main point: as banks de-risk in response to regulatory changes and reduce their traditional origination and distribution role in riskier markets, alternative asset managers are expanding into this territory to provide a direct channel from origination to placement, while also providing more flexible and nimble execution.

Project finance and asset-based finance are highly illiquid and complex investments, and the lack of systemic transparency in private markets compounds these risks.

·??????? To read “Private Credit Casts A Wider Net To Encompass Asset-Based Finance And Infrastructure,” click here.

·??????? To read “The Opportunity Of Asset-Based Finance Draws In Private Credit,” click here.

·??????? To read “Private Credit Could Bridge The Infrastructure Funding Gap,” click here.

Coming Soon: European Insurance Conference

We are pleased to invite you to our European Insurance Conference 2024, which takes place in London on November 27. The conference provides a unique opportunity to hear from senior European insurance analysts, renowned industry experts, engage in interactive panel discussions, and connect with other market participants in person.

To register for this complimentary event, click here.

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As always, you can always find the latest research from the S&P Global Ratings Economics team here.