Trade War Unsettles Stocks in US, China

Agence France-Presse

CORNISH: Winners and losers if this trade war escalates? Hong Kong's Hang Seng lost 2.5 percent. China claimed that the slides back its stance.

Palladium rose 0.2% to $981.97 USA per ounce.

But in contrast to stock market ructions, the country's currency markets remained quiet, with analysts expecting that any Chinese response to USA trade actions is unlikely to include changes in its foreign exchange policy.

That will nearly certainly spell a further escalation of tensions. That continued Thursday, after U.S. Trade Representative Robert Lighthizer said the tariffs won't apply to the European Union, Canada, Mexico, Argentina, Brazil and Australia. "It is impossible to imagine that they can not", Robert Carnell, head of Asia Pacific Research at ING in Singapore, wrote in a client note. "This can turn ugly on a global scale very quickly".

Concern that trade conflicts could wreak havoc on the world economy deepened as China responded to Trump's recent tariff hikes on steel and aluminum by warning it could order higher import duties on US goods including pork, apples and steel pipe. As a result, China said today that 128 US products have been included on the list of items that will be charged a total of $ three billion Dollars to cope with the loss caused by the tariffs increased by the United States on Chinese products. More recently, the president signed the Taiwan Travel Act, legislation allowing high-level talks between US and Taiwanese officials, which China called a "red line".

"If the Trump administration really wanted to hurt China and start a trade war, then they would go after those larger sectors", he said. He said China would target states and industries that are important to Trump, such as autos, planes, IT and semiconductors, wheat, corn and soybeans. These new measures have been taken to penalize China for theft of intellectual property of American companies.

U.S. stock futures were in negative territory.

The Internet Association, a Silicon Valley lobbying group comprising such giants as Google, Amazon and Facebook, also warned that a trade war between USA and China will result in higher prices for consumers, and industry job losses. Last year, the United States imported $506 billion in goods from China.

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Perhaps unsurprisingly, the prospect of a trade war between America's capricious president and the increasingly authoritarian Xi, who recently moved to cement his role as probable president-for-life, has done little to reassure markets.

With financial markets plunging and Standard and Poor's 500-stock index dropping by 2.5 per cent, this is the effect of the United States response to a country that the Trump administration says is responsible for thousands of lost American jobs and billions in lost revenues. He predicted tough talks ahead.

The Loonie is up to 77.34 cents US.

Trump argues that previous US presidents were way too soft on China. That was a response to the tariffs on steel and aluminum imports that Trump announced earlier this month.

Sales outside the USA are especially important for technology companies.

However, such an aggressive move from the United States could well backfire should talks break down or fail to materialize altogether.

Those goods include 128 U.S. agricultural and steel products including fruit, wine, pork, steel pipes and recycled aluminium.

"China does not want to fight a trade war, but it is absolutely not afraid of a trade war", the commerce ministry said. Trump is taking that further.

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