Renewed trade friction will likely be key to Japan’s decision on whether to delay a sales tax hike set for October, according to Goldman Sachs.

With an unexpected renewal of U.S.-China trade tensions, the Japanese government’s focus will likely turn to the risk that Japan’s economy is hit by developments overseas, Naohiko Baba, chief Japan economist at Goldman Sachs Group Inc. in Tokyo, wrote in a report dated May 27.

It is possible that Prime Minister Shinzo Abe will postpone the tax increase if there appears to be a bigger risk of slowing growth overseas, particularly in the U.S. and China, Baba said.

“Much will depend on whether the U.S. chooses to levy a 25% tariff on the remaining Chinese imports (slightly above US$300 bn), in our view,” he said.

The government’s final decision is now likely to come later than Goldman’s initial expectation of early June, Baba wrote, with key factors also including revised gross domestic product data to be released June 10.