Trump threatens to leave WTO
US president could impose tariffs on $200b in Chinese imports as early as this week
US President Donald Trump has threatened to pull out of the World Trade Organisation (WTO) if it doesn’t treat the US better.
“If they don’t shape up, I would withdraw from the WTO,” Trump said on Thursday in an Oval Office interview with Bloomberg News. He added that agreement establishing the body “was the single worst trade deal ever made”.
The WTO was created in 1994 as part of a US-led effort by big economies to create a forum to resolve trade disputes.
Trump also wants to move ahead with a plan to impose tariffs on $200 billion in Chinese imports as soon as a public-comment period concludes this week.
Asked to confirm the plan, Trump smiled and said it was “not totally wrong”. He also criticised management of the yuan, saying China has devalued its currency.
Companies and the public have till September 6 to submit comments on the proposed duties, which cover everything from selfie sticks to semiconductors. US Trade Representative Robert Lighthizer has previously said allowing China into the WTO in 2001 was a mistake.
US stock index futures fell yesterday, ahead of the long holiday weekend, with investors wary after President Donald Trump’s latest salvo in Washington’s trade war with China.
Wall Street snapped a fourday winning streak on Thursday after Bloomberg reported Trump was ready to impose tariffs on $200 billion (Dh735 million) more of Chinese goods next week, sooner than many expected, when a public comment period on the plan ends.
The US-China dispute has overshadowed what has been intense, but constructive trade negotiations between the United States and Canada, although a deal is yet to be struck.
“The threat of global growth taking a hit from a damaging US-China relationship remains ‘front and centre’,” said Dean Popplewell, vice president of market analysis at Oanda.
Traders also cautioned markets could be susceptible to bigger-than-usual gyrations as trading volumes are expected to be light ahead of the long Labour Day holiday weekend.
Asian shares came under renewed pressure yesterday as a report US President Donald Trump was preparing to step up a trade war with Beijing sent Chinese stocks lower and partially erased gains made in last week’s global rally.
Many emerging market currencies were also frail after Argentina’s peso sank on Thursday despite the central bank’s interest rate hike.
European shares were expected to open lower, with major European stock index futures falling 0.2 per cent in early trade.
MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.7 per cent for a monthly drop of 1.5 per cent.
Index underperformed
The index has underperformed MSCI ACWI, a gauge of the world’s 47 markets, for four months in a row as Sino-US trade worries hit Chinese shares.
The Shanghai Composite Index had fallen to near a 2-year low hit earlier in the month but recovered some of the day’s losses later in the session.
“China’s stock market has priced in a very bad situation as if the Chinese economy was going into a hard landing, which I don’t think will be the case,” said Chi Lo, an economist at BNP Paribas Asset Management.
While trade jitters dominated market sentiment, indicators suggest activity in the world’s second largest economy remained firm.
The official Purchasing Managers’ Index (PMI) yesterday showed growth in China’s manufacturing sector unexpectedly picked up in August after a twomonth slide.
Still, investors remained cautious as they expect more risks from the trade frictions down the road.
Japan’s Nikkei closed down
0.02 per cent.
US S&P 500 e-mini futures were slightly weaker a day after the S&P 500 lost 0.44 per cent from Wednesday’s record close of 2,914.
Pouring cold water on a rally in global shares that started in the middle of the month were hostile comments from Trump on trade.
“So far, Trump has carried out what he said he would do,” said Ayako Sera, market economist at Sumitomo Mitsui Trust Bank.
The US-China dispute has overshadowed what has been intense, but constructive trade negotiations between the United States and Canada, although a deal is yet to be struck.