November 29, 2021

China back on the offensive with tit-for-tat tariffs

LQDFX Forex news blog: China back on the offensive with tit-for-tat tariffs

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China is striking back to Trump’s fresh tariffs. The US administration imposed new tariffs just few days after USA’s invitation to China for another round of trade talks.

Ignoring experts’ opinions, surveys and even the business coalition of more than 60 US companies Trump insists on his tariff policy. He initially imposed 10% new tariffs on $200 billion worth Chinese imports. He also threatened to escalate them to 25% by the end of the year in case China responds accordingly.

Now China responded by adding $60 billion of 5,207 U.S. products to its import tariff list in retaliation.

The Chinese Finance Ministry said China had no other choice but to respond to U.S. unilateralism and trade protectionism. Beijing also condemned the States for being insincere and underlined that negotiating is the only way to end this trade spat.

The fresh U.S. and Chinese tariffs will come into force on the 24th of September.

The world’s two largest economies have already imposed tariffs to $50 billion of each other’s goods since July. Trade concerns are increasing as the tit-for-tat tariffs by Washington and Beijing on each other’s products are growing. Trade uncertainty prevails in the markets.

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Forex Market – China responds to US tariffs

The Dollar traded lower at a 7-week low against its major traded rivals. and the euro higher for a second day following the US-Sino trade war escalation. Although the greenback has benefited from fears of international trade turmoil in recent months, traders seem now cautious on the spat outcome.

Against the yen, the dollar rose to its highest since July 20 at 112.42 yen after the Bank of Japan left interest rates unchanged.

The Sterling hit a high of $1.3175, its highest level in almost eight weeks and last stood flat at $1.3169. It hit a seven-week high of 0.8865 pound per euro.

Oil prices got close to $80 per barrel, its highest level for 2018. Concerns a supply shortfall may not be covered once U.S. sanctions on Iran come into force outweighed a U.S. inventories increase. Brent crude futures gained 1.3%. U.S. crude futures gained 1.4% from their last close.

Sources: Reuters, CNN money, BBC

PLEASE NOTE The information above is not investment advice.