Goldman Sachs said it expected China to adopt a slightly easier monetary stance in the face of tit-for-tat tariffs between Beijing and Washington that, while likely to have limited immediate impact on the economy, were at risk of escalating.

On Friday, the Trump administration imposed tariffs on $50 billion of imports from China, a move that came on top of hefty duties on steel and aluminum imports implemented at the start of June. China retaliated swiftly by announcing reciprocal tariffs on U.S. products, ranging from soybeans and autos to seafood.

Goldman Sachs analysts forecast that the negative growth impact on China of the tariffs would be 10-20 basis points of gross domestic product (GDP), while the effects on Chinese consumer price index (CPI) inflation would be “modest, on the order of 10-20 basis points”.