To the surprise (?) of many, Trump brought the US-Sino trade war to the next phase. The US administration imposed new tariffs just few days after USA’s invitation to China for another round of trade talks.
Despite experts’ opinions, surveys and even the business coalition of more than 60 US companies Trump insists on his tariff policy. He initially imposed 10% 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.
China will respond accordingly, saying that they have no other choice and that Trump “poisoned” the atmosphere for further negotiations. Beijing condemned the States for being insincere and underlined that negotiating is the only way to end this trade spat. It is unlikely that China will not send a delegation for the next round of negotiations.
The fresh U.S. 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.
Forex Market – US-Sino trade war
The Dollar traded lower 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.
The Swiss Franc traded at a 6-month peak versus the greenback.
The Sterling dropped 0.1% against the US dollar and the single currency following the a 1 ½ month high of the previous sessions. An EU leaders’ summit and talks around Brexit progress are expected later this week.
Oil prices fall following the beginning of the Phase 2 of the US-Sino trade war. The escalation of the trade dispute has a significant impact on economic growth and, consequently, the oil prices. Brent crude futures were down 29 cents a barrel. U.S. crude futures dropped by 15 cents from their last close.
Sources: Reuters, CNN money, BBC
PLEASE NOTE The information above is not investment advice.