Oil prices rebound from one-month low after Trump's tariff threat

Saul Bowman
Мая 7, 2019

World markets swooned Monday after US President Donald Trump threatened to increase tariffs on imports from China at a time when investors were expecting trade tensions to subside.

Trump said tariffs on $200 billion of goods would increase on Friday to 25 percent from 10 percent, reversing a decision he made in February to keep them at 10 percent due to progress between the two sides. "325 billion dollars of additional goods sent to us by China remain untaxed, but will be shortly, at a rate of 25 per cent", he said.

"We do know the president tends to retreat from more aggressive displays, so I am viewing this thinly veiled threat as political posturing or a tactical decision to apply more pressure on China to put through a trade deal that aligns with the best United States of America economic interest at heart".

"Trump has taken the proverbial sledgehammer to the walnut this morning and the only two words likely to be on the minds of traders and investors this week are "trade talks", Jeffrey Halley, a senior market analyst at OANDA, said.

Tariffs on Chinese goods are actually paid to the United States by the companies importing the goods. With China we lose 500 Billion Dollars.

"The president is, I think, issuing a warning here, that, you know, we bent over backwards earlier, we suspended the 25 percent tariff to 10 [percent] and then we've left it there". That increase will now go into effect on Friday, Trump said in a tweet. "It's going to mean that investors will be very focused on the trade issues even beyond China", with a review of US auto-import tariffs still pending, she said. After all, trade negotiations are as much a matter of domestic policy as they are foreign policy.

The move prompted sharp falls in stocks in Asia Pacific on Monday with China's blue chip stock index dropping 4% - its biggest fall for two months - while the Hang Seng fell 2.5%.

Читайте также: Man City Overtake Man Utd As Most Valuable Premier League Club

Besides a greater opening of the Chinese market to USA goods, Trump is pressing for structural changes such as Beijing ending its practice of forcing USA companies that operate in China to share their technology. Oil futures also opened lower, CNN stated.

However, along with the Tweets from President Trump and subsequent potential of escalating trade war pushed the VIX reading above 16.50.

His support for Trump's approach to China stood in contrast to Democratic frontrunner Joe Biden, who said last week that the world's second largest economy is "not competition" to the United States and claims that Beijing is going to "eat our lunch" are totally overblown.

By potentially scotching the trip, Beijing would be following up on its pledge to avoid negotiating under threat, it said.

"The prospect of higher and broader tariffs was one factor that drove markets down in the fourth quarter of 2018, but markets have since come to believe that some sort of deal was imminent to avoid them", Chovanec said.

If Trump carries out his threat, American companies in China "would be very concerned" about official retaliation, said Parker. "People are realizing that if talks are still continuing there's a chance that this escalation can once again de-escalate", she said.

The deficit, which refers to the gap between imports and exports, is growing because the strong USA economy is creating demand for Chinese imports.

При любом использовании материалов сайта и дочерних проектов, гиперссылка на обязательна.
«» 2007 - 2019 Copyright.
Автоматизированное извлечение информации сайта запрещено.

Код для вставки в блог

Other reports by

Discuss This Article