Global markets continue to fall amid fears of trade war

Editorial: Is trade war necessary?
US/China trade war escalates as Donald Trump mulls $100 billion tariff
Author

09 April, 2018

Many of China's largest exports to the USA have yet to be hit-telephones, laptops, and modems & routers together made up around $100 billion of trade revenue for China in 2017, for example.

The escalating trade confrontation between Washington and Beijing threatened to boil over after President Donald Trump lashed out again and China called on the European Union to join the battle, sending global stocks into the red.

"The market is getting more concerned about the possibility of a trade war between the U.S. and China", said Tom Cahill, portfolio strategist at Ventura Wealth Management. It will be a double-whammy for the auto industry, which already faces higher prices on steel and aluminum because of Trump's tariffs on imported steel.

China has threatened its own tariffs on USA products like pork and soybeans. Placing duties on these goods could inflict significant pain on Chinese manufacturers, but also on United States consumers, and also the American, South Korean and Japanese suppliers who provide components to China-based contract manufacturers like Foxconn.

Earlier this week, the United States announced new tariffs on $50 billion worth of Chinese goods, claiming that China is stealing USA intellectual property.

"Economic data and forecasts from the IMF, OECD, World Bank and others have been revised steadily upwards over the a year ago, which would tend to indicate a sustained recovery of trade in 2018 following strong trade growth in 2017", Agah said.

This could mostly fizzle out, as both the USA and Chinese tariffs are still only in the proposal stage. The Dow fell more than 570 points, or 2.3 percent.

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Chinese state media yesterday denounced Mr Trump's latest threat, with nationalistic tabloid Global Times saying it reflected "the deep arrogance of some American elites in their attitude towards China".

There is still time for the president to step back from the precipice, but it will take his hearing from the people who voted for him, letting him know that they're the ones who stand to lose the most from his trade policy. "So, we are not really anxious about this new tariff", said Bhatia. It was followed by a memorandum to impose $60 billion in extra tariffs on China over allegations of intellectual property theft. The issue has been extensively discussed by officials, including the president and foreign minister, as well as in opinion commentaries ("China voice: Ten reasons China, U.S. can avoid Thucydides Trap", Xinhua, 2017).

China plans to slap tariffs on most vehicles, including electric cars. In a double whammy to USA industry, our own government is threatening to impose 25 percent tariffs on a range of industrial goods and machinery imported from China. Those tariffs have yet to go into effect.

"This is what a trade war looks like, and what we have warned against from the start", said National Retail Federation President and CEO Matthew Shay.

The secretary tried to assure investors that Trump's willingness to fight for United States interests would be a "long-term positive" for American companies.

The International Monetary Fund also expressed concern, saying the proposed tariffs would likely damage the United States economy and those of other nations.


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