Tokyo (AFP) – Jitters about US tariffs hammered stocks and the dollar again Friday as President Donald Trump acknowledged the costs from his rollercoaster trade offensive but predicted a “beautiful” ending.
After Trump relented on many tariffs but upped the ante on China, gold rose as discombobulated investors fled to safer assets, while warning lights kept flashing in bond markets and oil fell on recession fears. The US leader said Thursday that the European Union was “very smart” to refrain from retaliatory tariffs even as the bloc’s chief warned it could tax US Big Tech firms. “(The EU) were ready to announce retaliation. And then they heard about what we did with respect to China,” Trump said.
Trump acknowledged “a transition cost and transition problems,” but dismissed global market turmoil. “In the end it’s going to be a beautiful thing.” For investors, the realization that nothing had been resolved, coupled with Trump’s decision to double down on his battle with economic superpower China, fuelled another bout of selling. On Wall Street, the broad-based S&P 500 finished down 3.5 percent on Thursday after soaring 9.5 percent the day before. The Dow Jones shed 2.5 percent and the Nasdaq 4.3 percent.
On Friday in Asia, Tokyo sank more than four percent—a day after surging more than nine percent—while Sydney, Seoul, Singapore and others were also in the red. Oil and the dollar slid on fears of a global slowdown while gold hit a new record above $3,200, as investors spooked by Trump’s erratic policies dumped normally rock-solid US Treasuries. “The sugar high from Trump’s tariff pause is fading fast,” said Stephen Innes at SPI Asset Management. “Bottom line: the world’s two largest economies are in a full-blown trade war—and there are no winners.”
– Climbdown –
In a spectacular climbdown Wednesday, Trump paused for 90 days tariffs of 20 percent on the EU and even higher levies on other trade partners, including 24 percent on Japan. But levies on China, which has retaliated with tariffs on US goods, were not only maintained but hiked further. The White House on Thursday clarified that tariffs on Chinese imports are now at a staggering total of 145 percent. This was because the latest hike came on top of a 20 percent tariff already imposed. China has retaliated with levies of 84 percent on US imports.
– ‘Golden Age’ –
Trump says he wants to reorder the world economy by forcing manufacturers to base themselves in the United States and for countries to lower barriers to US goods. Howard Lutnick, his commerce secretary, posted on social media Thursday that “the Golden Age is coming. We are committed to protecting our interests, engaging in global negotiations and exploding our economy.”
The EU welcomed the US president’s partial row-back and proffered its own olive branch, suspending for 90 days tariffs teed up on 20 billion euros’ ($22.4 billion) worth of US goods. But the 27-nation bloc’s chief Ursula von der Leyen told the Financial Times that it remained armed with a “wide range of countermeasures” if negotiations with Trump hit the skids. “An example is you could put a levy on the advertising revenues of digital services” applying across the bloc, she said.
Trump likewise warned that the tariffs could come back after the 90 days. “If we can’t make the deal we want to make… then we’d go back to where we were,” he said. Canadian Prime Minister Mark Carney called Trump’s reversal a “welcome reprieve” and said Ottawa would begin negotiations with Washington on a new economic deal after elections on April 28. Vietnam said it had agreed with the United States to start trade talks, while Pakistan is sending a delegation to Washington.
Chinese President Xi Jinping will visit Vietnam, Malaysia and Cambodia next week, Beijing’s foreign ministry said Friday. In its latest measure, Beijing announced it would reduce the number of Hollywood films imported, but said it remained ready for dialogue. “We hope the US will meet China halfway, and, based on the principles of mutual respect, peaceful coexistence and win-win cooperation, properly resolve differences through dialogue and consultation,” Commerce Ministry spokeswoman He Yongqian said.
© 2024 AFP
