Hong Kong (AFP) – Asian markets slipped Monday after US President Donald Trump reignited his trade war with Beijing by threatening last week to impose 100 percent tariffs on goods from China. However, the losses were tempered slightly by a more conciliatory tone on Sunday when Trump described Chinese counterpart Xi Jinping as “respected”. Trump wrote on social media Friday that he would impose an additional 100 percent tariff on China and threatened to cancel a summit with Xi, citing Beijing’s export curbs on rare earth minerals used in a range of goods including smartphones, electric vehicles, and military hardware.
The extra US levies, plus export controls on “any and all critical software” would come into effect from November 1 in retaliation for what he called Beijing’s “extraordinarily aggressive” moves. “There is no way that China should be allowed to hold the World ‘captive’,” he said. Chinese products currently face US tariffs of 30 percent, while Beijing’s retaliatory tolls are currently at 10 percent. The outburst sent Wall Street into a spiral, with the Nasdaq losing more than three percent, and came as investors were already on edge over a recent tech-led surge that has stoked fears of a stock bubble.
However, investors took a little heart from a post Sunday in which Trump said “The U.S.A. wants to help China, not hurt it!!!” and added that “respected President Xi (Jinping)…doesn’t want Depression for his country.” Beijing, in turn, accused Washington of acting unfairly, and the Ministry of Commerce on Sunday called the threat a “typical example of ‘double standards’.” “Threatening high tariffs at every turn is not the right approach to engaging with China,” it said in an online statement.
The announcement came after months of fragile peace between the economic superpowers as they looked to reach a full trade deal after Trump’s tariff bombshell in April that saw the two sides ramp up tit-for-tat levies to eye-watering levels. “The question now is what comes next. That is, of course, impossible to say with any certainty,” said Michael Brown at Pepperstone. “However, it essentially comes down to whether this is the start of a return to the ‘bad old days’ of early April, and an end to the US-China trade truce; or, whether this is yet another negotiating gambit.”
Markets across Asia sank into the red, with Hong Kong shedding more than one percent, while Sydney, Singapore, Seoul, Wellington, Taipei, and Mumbai were also well down. Shanghai was also down but pared earlier losses following data showing Chinese imports and exports surged more than expected last month, providing a much-needed boost to the economy. Still, Trump’s comments Sunday provided a little support, with US futures soaring more than one percent. And London, Paris, and Frankfurt clawed back some of Friday’s losses.
Gold, a safe-haven asset in times of turmoil and uncertainty, continued its rise, touching another record of $4,060. Bitcoin also edged back up after being battered over the weekend in a Trump-fuelled sell-off that saw the cryptocurrency fall below $105,000 from around $122,000. It was sitting just below $115,000 in Asian trade. There was also a healthy bounce for oil, which tanked Friday on Trump’s remarks, which compounded selling of the commodity owing to the Israel-Hamas peace deal that soothed worries about supplies from the Middle East.
“Despite the possibility of a replay on how the markets reacted back in April, we believe the looming threat may be short-lived,” said Morningstar’s Kai Wang. “Both sides appeared to be posturing ahead of their November 1 meeting when the tariff truce is set to expire,” he added. He also pointed out that the US government shutdown was “increasingly dampening consumer sentiment in the US, and we do not believe Trump wants to re-escalate foreign policy issues without solving the domestic shutdown first”.
– Key figures at around 0810 GMT –
Hong Kong – Hang Seng Index: DOWN 1.5 percent at 25,889.48 (close)
Shanghai – Composite: DOWN 0.2 percent at 3,889.50 (close)
London – FTSE 100: UP 0.3 percent at 9,457.56
Tokyo – Nikkei 225: Closed for a holiday
Euro/dollar: DOWN at $1.1601 from $1.1615 on Friday
Pound/dollar: DOWN at $1.3334 from $1.3352
Dollar/yen: UP at 152.41 yen from 151.57 yen
Euro/pound: UP at 87.01 pence from 86.98 pence
West Texas Intermediate: UP 1.6 percent at $59.84 per barrel
Brent North Sea Crude: UP 1.6 percent at $63.70 per barrel
New York – Dow: DOWN 1.9 percent at 45,479.60 (close)
© 2024 AFP
