"We're In Uncharted Waters" - Stocks, Yuan, Commodities Slump As US-China Trade Wars Re-Escalate
10 July, 2018
Just when you thought it was safe to BTFTrade War Dip, a headline hits to remind you that President Trump is anything but done with China.
"As a result of China's retaliation and failure to change its practices, the President has ordered USTR to begin the process of imposing tariffs of 10 percent on an additional $200 billion of Chinese imports.
This is an appropriate response under the authority of Section 301 to obtain the elimination of China's harmful industrial policies.
USTR will proceed with a transparent and comprehensive public notice and comment process prior to the imposition of final tariffs, as we have for previous tariffs."
“For over a year, the Trump administration has patiently urged China to stop its unfair practices, open its market, and engage in true market competition.”
“China has not changed its behavior -- behavior that puts the future of the U.S. economy at risk. Rather than address our legitimate concerns, China has begun to retaliate against U.S. products. There is no justification for such action.”
"If the U.S. loses its senses and publishes such a list, China will have to take comprehensive quantitative and qualitative measures," the Ministry of Commerce said at the time.
Trump's new list "doubles down on a reckless strategy that will boomerang back to harm U.S. families and workers. We still don't know what the endgame is'' for Trump's strategy."
Goldman: "The tariff would not take effect until September at the earliest but nonetheless marks an escalation of trade tensions. Networking equipment, computer components, and furniture would be the most heavily impacted imports in this round. We believe that the release of the list raises the probability that further tariffs will be implemented, though we note that the publication of the list is not a commitment to implementation, which would need to be ordered in a separate step following a comment period."
Mark Mobius: "We are in uncharted waters."
Don Riley, chief investment officer at Wiley Group: "Markets won't like it and yesearnings positives will most likely be overwhelmed by trade fears."
Strategists at Singapore's DBS bank: "The tariff news was also ill-timed for investors hoping for a trade war respite to capitalize on the expected stream of strong US corporate earnings. Overall, Trump reminded markets that US-China trade tensions are likely to escalate ahead of the US mid-term elections in November."
Edward Alden, senior fellow at CFR, says Trump's crackdown on trade with China is a "dangerous miscalculation".
Richard Turnill, chief investment strategist at BlackRock, told Bloomberg TV earlier: “In the short run it’s very difficult to see what’s going to bring an end to this escalation of tit-for-tat. It’s those increasing concerns that are going to weigh on market returns and force investors increasingly to look for more resilience in their portfolios.”
"With this announcement, it’s clear the escalating trade dispute with China will go one of two ways – a long, multi-year trade war between the two largest economies in the world that engulfs more and more of the globe, or a deliberate decision by President Trump and President Xi to meet and begin crafting an agreement that levels the playing field between China and the U.S. for local farmers, workers and businesses."
"Despite the serious economic consequences of ever-increasing tariffs, today there are no serious trade discussions occurring between the U.S. and China, no plans for trade negotiations anytime soon, and seemingly little action toward a solution."
"It’s time to take the first step into a new era of fair and free trade. I strongly urge President Trump and President Xi to meet soon face-to-face to craft a solution to establish fair and lasting trade between our two countries."