Goldman Sachs doesn’t see a trade deal taking shape before the 2020 presidential election.

“We had expected a final round of tariffs targeting remaining Chinese imports at a 10% rate,” the analysts, led by chief U.S. economist Jan Hatzius, wrote in a note to clients. “But news since President Trump’s tariff announcement last Thursday indicates that U.S. and Chinese policymakers are taking a harder line, and we no longer expect a trade deal before the 2020 election.”

Part of that harder line included the People’s Bank of China allowing its yuan currency (CNYUSD=X) to weaken past the psychologically key level of 7 against the dollar. That sent global stocks into a tizzy Monday, with the Dow Jones Industrial Average (^DJI) posting its worst day of the year, falling 767 points. Also on Monday, the Treasury Department issued a press release designating China as a “currency manipulator.”

Meanwhile, analysts at Credit Suisse, issued a note to clients Monday, saying the yuan’s break of the 7 level “suggests a lower probability of a timely trade deal.”

Goldman doesn’t see the 10% tariffs on the remaining China imports, which are due to take effect September 1, going away any time soon.

“We expect the newly announced 10% tariffs on the last $300 billion to remain in place on Election Day, and other forms of tit-for-tat retaliation are possible along the way,” the analysts wrote.

Federal Reserve vs. trade war

The market has been pricing in a 100% chance of a rate cut at the Fed’s September meeting, following its July cut last week, which was the first cut in almost 11 years.

“The Fed has been increasingly responsive this year to trade war threats, bond market expectations, and global growth concerns,” the Goldman Sachs analysts wrote. “In light of growing trade policy risks, market expectations for much deeper rate cuts, and an increase in global risk related to the possibility of a no-deal Brexit, we now expect a third 25bp rate cut in October, for a total of 75bp of cuts.”

The 75bp cut forecast includes the 25bp cut the Fed already initiated last week.

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Scott Gamm is a reporter at Yahoo Finance. Follow him on Twitter @ScottGamm.

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