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Asian markets plunge as Trump threatens to hike China tariffs President Trump sent Asian markets plunging Monday after threatening to hike tariffs on $200 billion of Chinese goods at the end of the week in a bid to speed up stuttering trade talks between the economic superpowers. Shanghai plunged more than 5% as it led big losses across the region, with the Chinese yuan also taking a battering after the president threw a spanner into the high-level negotiations, which many observers were expecting to wrap up imminently. "For 10 months, China has been paying Tariffs to the USA of 25% on 50 Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods," Trump tweeted Sunday night. "The 10% will go up to 25% on Friday." The warning will throw a shadow over the next round of talks, with a delegation from Beijing due in Washington this week, with Bloomberg News reporting the Chinese side are considering their position. The two sides have imposed tariffs on $360 billion in two-way trade since last year. But Trump and his Chinese counterpart Xi Jinping agreed a truce in December, helping fan a surge across world stock markets for the past 4 months. "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'," said OANDA senior market analyst Jeffrey Halley. Hong Kong tumbled 3.3% by the break and Shanghai was off 5.2% as investors there returned for the first time since Tuesday. News that the People's Bank of China would slash the amount of cash lenders must keep in reserve, to support small businesses, had little impact in the face of Trump's warning. Singapore was off 3.3% and Taipei shed 1.8%, while Sydney and Wellington were each 1% down. Manila and Jakarta were also sharply lower. Tokyo and Seoul were closed for holidays. - Yuan tumbles - "Trade had been put to the side by many market participants," said Andrew Tilton, chief Asia-Pacific economist at Goldman Sachs. "Market pricing assumed there would be some kind of a deal, and no further escalation in tariffs. And meanwhile the growth outlook was actually improving," he told Bloomberg TV. Trump's threat now "raises the spectre of a significant hit to growth should these tariffs escalate and should the uncertainty associated with that weigh on investment going forward." The yuan also took a hiding, shedding more than 1.3% at one point against the dollar, its heaviest fall in more than three years. The currency had been sitting around 10-month highs on the back of optimism the two sides would sign off on a trade pact. "Investors will remain bearish on the yuan, as they reprice in trade war risks because the new developments are a reversal of previous positive progress," Ken Cheung, senior foreign-exchange strategist at Mizuho Bank. "The news was unexpected." The flight to safety saw the dollar surge against higher-yielding, higher-risk units, with South Africa's rand off one percent, the Mexican peso 0.9% lower and the Australian dollar 0.6% lower. On oil markets both main contracts were hammered more than two percent by worries that a trade war between the world's top two economies could hit demand for the commodity. Adding to weakness in the sector is the US drive to increase output, which comes as it reports rising stockpiles, which are offsetting unrest in Libya, tensions with Iran and production caps by OPEC and Russia. However, while trading floors are awash with red, Stephen Innes at SPI Asset Management remained positive. "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 USA economic interest at heart. "Despite US-China trade talks hitting an apparent impasse based on (the) tweet, I think a deal will be signed shortly." Trump's outburst overshadowed another blockbuster US jobs report Friday that reinforced the view that the economy is in rude health, while measured wage inflation eased pressure on the Federal Reserve to hike interest rates.   Honesty is the best policy. |
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It is unfortunate that there isn't much knowledge of China being displayed in this topic. The U.S. needs China's 1.5 billion consumers. The trade dependencies go both ways. Honesty is the best policy.
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It is Okay that you use French here, I understand you are a French. As I knew that French are very proud of their language. I remember when I was in France with my family, we asked direction of an opera in English but French people on streets refused to speak English. Honesty is the best policy.
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It is unfortunate that there isn't much knowledge of China being displayed in this topic. The U.S. needs China's 1.5 billion consumers. The trade dependencies go both ways. My banker friend went to China in April 2007, I went to China in May 2008. I have same opinions about China's real estate market. The "ghost town" in China is very weird sign because Chinese leader wanted to "save face" by increase GDP Growth % by building lots and lots building and let them vacant. There are more rich Chinese go abroad to buy properties in USA, Canada, Australia, UK, .... But almost only few Americans went to China to buy properties. It is a fact that Americans have much better MONEY concept. Honesty is the best policy.
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It is unfortunate that there isn't much knowledge of China being displayed in this topic. The U.S. needs China's 1.5 billion consumers. The trade dependencies go both ways.
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5/6/2019 8:48 pm |
You are correct and China is soon going to have some serious financial problems. I assure you Trump is very much aware of this and what he is doing is more than trade negotiations. What he is doing is forcing the Chinese to the bargaining table NOT for trade of goods but to get our USA political prisoners back. The USA news media does NOT report this. There are about 10 USA citizens in prison in China charged with ridiculous crimes. Trump wants them home. I travel China often over the past 2O years. I have a condo on the Pearl River in Guangzhou. I not only do business in China but for 10 years took American, Mexican, Canadian and Polish business men and women to China to sell TO the Chinese. The biggest problem is, as you know, is Beijing wants all the drawings, advertisings, data, copyrights for their widgets to sell. Trump I doing something about that also as no other country on earth is so low. I was in Beijing when Obama landed in early 2016 when the Chinese made Obama leave his plane through the emergency exit (butt hole) of his plane when officials refused to roll up the stairway!!! LOL LOL They just had Michele who was pain in the ass (sorry) and didn't want any more of Obama's B.S. Take care, Lady.....when you know what's really going on, it makes for better understanding. Ray
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I had to check Google Translate for the meaning of French "notament" to English "especially". I know probably 10 to 20 words of French. Luckily, Google Translate can explain for me. Most democracy countries are "Capitalists" and have more "Freedom of Speech" and better economy concept. Communist countries such as Russia, North Korea, North Vietnam, East Germany, China, .... their government want to control their people. They have less MONEY knowledge. Honesty is the best policy.
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Chinese don't know there are many countries can provide even cheaper labor to make products (merchandise). Those countries are Vietnam, India, Indonesia, .... charge lower labor wages than China. Indians can speak much better English than Chinese. USA doesn't need to reply on China for cheaper labor anymore. Without U.S. consumers to buy the products that made in China, China's economy will be trouble. Honesty is the best policy.
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Do you know why I said China needs USA much more than USA needs China? USA imports the consumer stuffs because Chinese cheap labors that can bring the "cost" down. Those products (merchandise) have less value, i.e. clothing, shoes, (low tech) ..... On the other hand, USA can manufacture big equipment i.e. airplanes, ships, rocket, .... that China can't produce. USA sold lots of agriculture products, i.e. corn, soybean, ... to China because Chinese population. Those agriculture products won't hurt America's economy. Chinese is notorious about "patent / copyright infringement". They don't respect the first inventor's "patent rights". They saw a product that making good sell, so they copy lots of them and brought the price down. Chinese is not creative but only copy other's inventions. Chinese made fake Viagra, fake CD, fake DVD, ... without consent with the owners. For example: I have hypertension, so MD prescribed "Diovan" brand name. Then when Diovan patent expired, China made its generic name "Valsartan" and sold to the whole world. In couple months, the whole world noticed that "Valsartan" made in China was "impurity". Please Google "Diovan impurity", you will know I don't lie. FDA immediately took those fake, impurity "Valsartan" out of the market and the whole world pharmacies also took those fake, impurity "Valsartan" out of the shelves. No more generic Diovan (Valsartan) in the world, and the whole world is suing China that they produced the impurity Valsartan. Shame on China!!! I am one of the victims of China's fake impurity drug "Valsartan". It is a fact that effected on me. I heard that China made blue pill of "Viagra" from blue color cement. What an idiot to make any drug from cement!!! Stupid. Shame on them. Honesty is the best policy.
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Americans are capitalists since the beginning, Chinese are communists. Americans know MONEY much better than Chinese. China needs USA than USA needs China. Chinese don't know how to make airplane, ships, rockets, ... not even good in making cars durable, but they thought they are the leader of the world. Dream on!!! They are living in an "Emperor" dynasty. China charged high tariffs to prevent their rich Chinese people to buy foreign goods. When I arrived in USA in 1980, there were only few Chinese than Taiwanese, but since Sept 2008 (after summer Olympics in Beijing), China opened "tourist" visa, so that they let their people to travel outside. All the sudden, there are much more Chinese in USA (USA permitted Chinese immigrate visa). So, for the past decade, Chinese people arrived to USA, Australia, Canada, .... like bird migration. So many weird methods to come to USA, Chinese pregnant women came to USA to deliver their babies (babies immediately granted as U.S. citizen), then the moms and babies went back to China. When the babies become 18, their parents can apply for U.S. Green Card. What a silly concept to migrate to USA!!!???? China dream to be the world leader, NOT SO FAST. Their "ghost town" real estate will drag them down, once their lenders (banks) can't get the loan payments on time. It could crash their economy fast. The real estate market in China have so many vacancies that became "ghost town" for years, but the top 1% rich Chinese came to USA, Australia, Canada, UK, ..... to buy properties but they don't live in USA, Australia, Canada, or UK, ... they went back to China and let their oversea properties vacant. It is a dangerous sign. They over-priced to buy properties oversea together, made the local properties over-priced. They don't understand the foreign real estate markets are NOT for them to control. They don't have the concept about Capitalism and they have "language barrier". It is ridiculous. They bought properties from previous owners who can speak Chinese (Mandarin), and the real estate agents who speak the same language. In the future, those rich Chinese learn their lessons - they took their money from China to foreign countries, let them vacant, garden plants died, .... How can they make money when selling their properties? I have much better concept about money than them. The rich Chinese 2nd generation, bought high price cars, i.e. Porsche, Lamborghini, Mercedes, .... iPhone, ... to show-off. I asked them "why do you buy those luxurious items?" They said those cars are 3.5 times in China than in USA due to tariffs and luxury taxes in China. I saw so many Chinese immigrants live in Rowland Heights (my town) because they can continuously speak Chinese (they don't learn English in USA). What a weird concept??? They don't want to be "assimilated", then why they want to live in USA??? Outrageous!!! Honesty is the best policy.
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A big shake-up is coming like a tsunami. Trump vows higher U.S. tariffs on China goods. Honesty is the best policy.
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