Trade War Unsettles Stocks in US, China

Dianna Christensen
March 24, 2018

On Friday chipmakers fared especially badly.

Some industry participants said the tariffs and the threat of a brewing US-China trade war would create more Chinese demand for European pork exporters, who have boosted supplies to China in the last two years after sanctions on Russian Federation closed one of the region's key markets.

The China tariffs usher in a trade showdown that has been long expected by President Trump's base, whom were frequently told that China would be punished for its unfair trade practices during the 2016 presidential campaign.

Though the European Union has been granted a possible exemption, stock markets across the region have fallen sharply. The German DAX was 1.35% lower, the French CAC was 1.26% in negative territory and the Spanish IBEX was down 0.98%.

The all share closed 1.43% lower at 56,405.60 points, and the top 40 lost 1.51%.

China's blue-chip CSI300 index was down 2.9 percent at 3,891.47, its lowest close since February 12. South Korean stocks fell 3.2 percent.

A day after the Dow Jones industrial average dropped more than 700 points, Wall Street was poised for a steadier session.

The Russell 2000 index of smaller-company stocks sank 22 points, or 1.5 per cent, to 1,521, but it's risen slightly this month while the S&P 500 is down 4 per cent. Bullish investors hope that the administration will soften its tough stance with China, similar to how tariffs on steel and aluminum imports were later scaled back significantly.

Deutsche Bank provided an example of how uncertainty caused by the Trump administration measures could cause chain reactions that would affect other industries.

"Donald Trump is arrogant and thinks the United States can profit from a trade war, but the reality is that no-one gains from trade wars".

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On Thursday, China announced planned to impose reciprocal tariffs on 128 United States products that had an import value of about $3 billion a year ago.

"Everybody's pushing each other around to do some negotiating", said David Collins, chief operations officer at CMC China Manufacturing Consultants, which advises companies on setting up factories in China. "Coming back to the negotiation table is a relatively good result", Wang said.

On Thursday they fled stocks and bought bonds, which sent bond prices higher and yields lower. China responded to news of the reforms by warning that while it did not want a trade war, it was "absolutely not afraid" of one and "fully prepared" to defend its interests. But critics say he has missed an opportunity to build an effective worldwide coalition against China's trade practices, angering allies in Europe, North America and Asia by threatening to slap blanket tariffs on steel and aluminum imports - even if exemptions are being carved out - and acting unilaterally this week in a way that could undermine the global trade system.

The United States also plans to impose new investment restrictions and take action against China at the World Trade Organization.

Wall Street's three major indexes tumbled in late afternoon trading on Friday as investors shied away from risky bets going into the weekend while they braced for a potential US trade war with China. But, the US's trade deficit with China is "the largest deficit in the history of our world", he said.

How bad will the U.S.

The Vice President of the US Soybean Export Council says the country's ag industry can not afford to get into a trade war. With almost 1.4 billion people, China is a big market for the largest USA businesses.

With real fears of a potential trade war dampening investor sentiment, the tone among markets was downbeat.

The greenback accelerated its fall versus the yen in early Tokyo trading on Friday, slipping below ¥104.70.

Other reports by GlobalViralNews

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