Markets Right Now: Stocks fall on fresh worries over trade
Jun 21 2018 by Cristina Jennings
In a post illustrated with an unflattering picture of Trump with his hair flying in the wind, the ruling Communist Party's People's Daily said on its WeChat account that China had the confidence and the ability to win the trade battle.
Trump is gambling that Beijing has the most to lose.
White House trade adviser Peter Navarro, who views China as a hostile economic and military power, said on Tuesday that China has underestimated Trump's resolve to impose more tariffs unless it changes its "predatory" trade practices.
Analysts say Beijing is determined to develop its technological prowess and create world-leading companies in such fields as robotics and electric cars under a program it calls "China 2025". "We have no choice".
"It's the darkest hour and the most agonising moment in the first half of this year.there are disaster victims everywhere", Zhang Yidong, strategist at Industrial Securities wrote on Tuesday, wrote in a note. Those tariffs were matched by China's threat to penalize on USA exports, a move that drew the president's ire. At the same time, China pulled back from the deal made with the United States on 21 May, which, among other things, involved buying more U.S. products worth USD70bn.
The numbers "suggest a broad-based slowdown is now emerging, and we expect this to continue", said Louis Kuijs, head of Asia economics at research firm Oxford Economics. USA companies, from Caterpillar to Qualcomm, would likely face obstruction from regulators in China, a market they rely on for an outsize share of sales. -China trade dispute hit stock indexes around the globe.
"Our phone lines are open; they have always been open", he tells reporters.
Less hawkish members of the Trump administration have echoed Navarro's thoughts.
"I reminded him that's not fair competition", Mr Pompeo said. "This is a problem that is long overdue in being tackled". He argued that the dispute will have "relatively small effects".
Even as the USA trade conflict with China deepens, Trump has raised trade tensions on other fronts.
Foreign business groups say the changes have been too little, too late. He added he would identify an extra $200bn of goods - for a possible total of $450bn, or most Chinese imports - "if China increases its tariffs yet again".
The EU yesterday meanwhile approved a raft of tariffs targeting U.S. goods. The price will be paid, in part, by American consumers and by American businesses.
Because Canada's economy is significantly smaller than the USA economy, Canadians have more to lose in the event of a trade war, says Ian Lee, an associate professor of business at Carleton University. The blue chip CSI300 index fell 3.6 percent to 3,621.12.
Even before trading partners imposed tariffs, USA farmers were facing a tough year. He cited two reasons it posed an even larger indirect problem for United States firms. A punitive duty the Trump administration applied to lumber imports from Canada has raised the price of a new home by $9,000, according to the National Association of Home Builders.
"Second, the potential financial market and confidence impact would be substantial".
Ramsey said the government needs "a comprehensive auto strategy that isn't just about a pool of money but also a strategy across the board in our own country to combat the threat of these tariffs". Even the Business Roundtable, an influential business lobby, urged the president to step back from the trade fight. But if trade relations get worse, it could be much less politically appealing for the USA and China to collaborate on North Korea.
But the ongoing rhetoric between Beijing and the Trump teams has left little hope for a quick solution.
Bank of Japan head Haruhiko Kuroda meanwhile on Friday defended his bank's decision to press ahead with the country's ultra-loose monetary policy.