US-China tit-for-tat rattles Asian markets after Trump’s ‘tariff tantrum’
US President Trump has caused widespread panic in Asian financial markets today after Fridays “tariff tantrum” where he used Twitter to announce new levels of tariffs on Chinese imports after China announced their response to his previous ramping up of the ongoing trade war between Washington and Beijing.
Asian shares have headed southward today after the President escalated tariffs in the US-China trade war renewing uncertainties about global economies.
Today’s selloff reflects how worried investors are about tariff hikes from both the US and China, and whether the latest chapter in the dispute could fuel a severe global economic slowdown.
The Thai Stock Exchange main index was down 29.24, a fall of 1.78%, early on Monday morning. Japan’s benchmark Nikkei 225 started dropping as soon as trading opened today and stood at 20,234.87 in the morning session, down 2.3%. South Korea’s Kospi lost 1.7% to 1,916.14. Hong Kong’s Hang Seng dropped 3.3% to 25,309.37 and Australia’s S&P/ASX 200 slipped 1.5% to 6,427.20. The Shanghai Composite was down 1.2% at 2,862.87.
The Dow Jones Industrial Average plunged more than 600 points on Friday after the latest escalations in the trade spat rattled investors. The S&P 500 is now into its fourth straight weekly loss.
President Trump Tweeted out a surly reply to China’s announcement of new tariffs on $75 billion of US exports. He “ordered” US companies with operations in China to consider moving them to other countries, including the US.
When leaving the White House for the G7 summit in France, Trump told reporters, “I have the absolute right to do that, but we’ll see how it goes.”
“For all of the Fake News reporters that don’t have a clue as to what the law is relative to Presidential powers, China, etc., try looking at the Emergency Economic Powers Act of 1977. Case closed!”
After the markets closed in the US on Friday he announced the US would increase existing tariffs on $250 billion of Chinese goods another 5%, from 25 to 30%. He also rattled off new tariffs on $300 billion of imports which would rise from 10% to 15%.
Trump also “ordered” UPS, Federal Express and Amazon to block any deliveries from China of the powerful opioid drug fentanyl. The stocks of all three companies fell as traders tried to assess the possible implications.
Some analysts now believe that the US Federal Reserve will lower interest rates this year.
Federal Reserve Chair Jerome Powell indicated last week that the central bank was prepared to cut interest rates but gave no clear signal on when and by how much, while suggesting that uncertainty over Trump’s trade wars have complicated the central bank’s ability to set interest rate policy.
