What they say
“Open and fair trade is fundamental to the success of Rio Tinto, as almost 90 percent of our products need to move from one country to another. Thanks to an increasingly integrated global economy, enormous benefits have accrued in terms of economic growth, better jobs, cheaper products and more dynamic societies. Most of the lessons through history show that wealth comes from cooperation not isolation. We all go backward when we close ourselves off from one another. We should not forget the lessons from the past, and we believe common sense will prevail in the end.”
Jean-Sebastien Jacques, CEO of Rio Tinto Group Plc
The metals market has been pressured by the trade war. The trade war impacts the metals market more based on market sentiment rather than fundamentals, such as demand and supply. A higher import tax will increase the costs of downstream consumers, narrowing their margins.
Zhu Yi, senior analyst of metals & mining from Bloomberg Intelligence “A trade war is not the solution to US economic problems. Take its steel and iron industry as an example — since the 1980s, the US has instigated quite a few steel and iron trade wars with other countries, yet such trade wars couldn’t turn around the recession in its steel and iron industry.”
Xu Xiangchun, information director with iron and steel industry consultancy Mysteel.com. Alongside the ongoing global trade saga, markets are increasingly wary of how an escalation of titfor-tat protectionist measures could hurt consumers in the US and corporate investment. It is hard to imagine world trade would go back to such an extreme scenario. Global supply chains are now highly specialized and delicate. Disruption in one part of the production process could imply a breakdown in the entire process.
Tai Hui, JPMorgan Asset Management chief market strategist A trade war initiated by unilateralism will seriously affect the confidence of all parties in the commitment made by the United States, and weaken the credibility of the US in the global economic governance system. The imposition of tariffs by the US not only undermines the ability of enterprises to allocate resources across borders in accordance with market economic principles, but also has a greater impact on the balance of supply and demand. Producers, consumers and employees from the US will all be deeply affected. Besides, given that the adjustment of monetary and taxation policies has led to the increase of global capital flows to the US, market inflation pressure will probably rise, asset bubbles may increase, and the gap between the rich and the poor in the US society may be wider.
Zhou Mi, a senior research fellow at the Chinese Academy of International Trade and Economic Cooperation Immediately after the US imposed 25 percent tariffs on $34 billion of imports from China, the nation retaliated in kind. While the impact of these moves will be modest, the big worry is on escalating trade tensions. Indeed, added uncertainty is already dampening business confidence and delaying investment internationally. A statement by China’s Ministry of Commerce strongly criticized the US move and vowed retaliation, but otherwise indicated restraint and continued commitment to reform and globalization. In our view, such restraint, as part of a strategy to assume global leadership, may limit the global economic damage of a trade war between the US and China.
Louis Kuijs, head of Asia Economics, Oxford Economics