The markets today

TORONTO (CP) — North American markets endured one of the worst weeks of the year as heightened trade tensions between the United States and China rattled investors.

U.S. President Donald Trump’s decision Thursday to add 10 per cent tariffs on US$300 billion of Chinese goods as of Sept. 1 was the dominant issue in a risk-off day as the Chinese vowed to retaliate.

“It seems like the trade wars, pardon the pun, trump all else,” said Allan Small, senior investment adviser at HollisWealth. He said U.S. consumers will be more affected by this round of tariffs than the earlier 25 per cent on US$250 billion worth of imports that were strategically placed to avoid technology gadgets and other popular items.

“We’re seeing a lot of people up in arms about this 10 per cent and of course, who knows, if nothing happens 10 could easily become 25 very quickly.”

The unknown manner in which China will retaliate if a big concern, Small added.

Will they increase tariffs of their own, limit access to China’s large supply of rare earth elements used in batteries, and buy fewer U.S. treasuries? “I think everyone is a little bit nervous as to what the retaliation from the Chinese will be,” he said in an interview. Some market watchers expect a ramp up of trade war rhetoric could prompt the Federal Reserve to further cut interest rates in the coming months. But Small said that will have little impact on corporate business decisions.