Morgan Stanley has warned of higher car prices following signs of further escalation in the U.S.-China trade war.
U.S. Trade Representative Robert Lighthizer announced Wednesday that he was examining ways to raise duties on Chinese vehicles to 40 percent, which is the tax that Beijing now levies on American-made cars. Such tensions are likely to hurt both auto consumers and manufacturers, Adam Jones, Morgan Stanley's chief U.S. auto analyst, told CNBC's Sri Jegarajah on Thursday.
"The auto industry is the quintessential global supply chain," Jones said at the Morgan Stanley Asia Pacific Summit in Singapore. "Any disruption of trade — be it between China and the U.S., or Europe and the U.S. or Japan, you name it — is going to lead to inflation."
But as the costs of doing business increases, "that's going to either make cars more expensive, which will hurt demand, or hurt margins. Probably a little of both," he continued.