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US Protectionist Stance Brings Fears of Trade War Back

24 March, 2018, 14:14 | Author: Melinda Barton
  • European stocks dive as Trump's trade war frightens investors

Spot gold was up 0.8% at $1,339.33 US per ounce early Friday morning.

Trump's crackdown on China came shortly after US Trade Representative Robert Lighthizer announced that more countries will be exemptfrom the steel and aluminum tariffs that Trump announced three weeks ago.

After Trump confirmed plans for $60 billion of China trade tariffs, China countered with its own list of proposed sanctions on U.S. imports, escalating fears of a global trade war.

"China would fight to the end to defend its own legitimate interests with all necessary measures", China's embassy in Washington said in a statement late Thursday.

The Shanghai Composite index closed down 3.6 percent at 3,152.76 points, its lowest close since Feb 9.

Major indices had their biggest one-day drop since February 8 on Thursday.

WH Group, the world's largest producer of pork after the takeover of Smithfields Foods by China's Shuanhui global in 2013, was among the worst performers on Hong Kong's Hang Seng index, falling up to 10 percent following the news of the intended tariffs.

Indicating that they would retaliate against tariffs announced by President Donald Trump.

In a separate note on Friday, the UBS chief investment office said it saw a 20 to 30 percent probability of "damaging retaliation" by China to US trade actions. Meanwhile, business groups representing companies ranging from Walmart Inc.to Amazon.com Inc. are warning U.S. tariffs could raise prices for consumers and sideswipe stock prices.

For the short-term, analysts expect soured sentiment for equity markets, though many saw a limited impact.

The Chinese government could also target USA technology companies that manufacture products in China, such as Apple, in the hope those firms would pressure Washington to back down, said Victor Shih, a professor of political economy at University of California, San Diego.

Commodities did not fare well, either. Tencent fell more than 4 percent after Naspers Ltd. revealed a plan to cut its stake in the Chinese internet giant.

Global stocks have plummeted as fears rise that the confrontation could provoke a damaging trade war. "We have a tremendous intellectual property theft situation going on" with China affecting hundreds of billions of dollars in trade each year, he said.

Oil futures rallied. Benchmark U.S. crude rose 95 cents to $65.27 a barrel in electronic trading on the New York Mercantile Exchange.

That is because millions of tonnes of cheap Chinese steel would still be on the market even if trade tariffs did make it unviable in the US.

The dollar eased against a basket of currencies on Friday as trade concerns triggered a bout of investor risk aversion. China imports almost $14.2 billion worth of soybeans every year.

"This has been long in the making", Trump said, adding that the tariffs could affect as much as $60 billion in goods.

"As there is no prospect of an easing in the U.S". China's Commerce Ministry said the USA had set a "very bad precedent" while the Foreign Ministry called the United States to make "rational and prudent decisions".


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