Trade war spooks global markets
As China says it will ‘never surrender’ to US. ..
More than £770bn was wiped off stock markets around the world after China and the US ramped up their trade war with a new round of tariffs.
on a bleak day for investors, Beijing retaliated against President Trump by hiking duties on £46bn of US goods.
China said it would never surrender to US pressure.
It came after Trump hit £150bn of Chinese goods with higher tariffs last week.
The battle spooked investors across the planet, sending the Dow Jones index down more than 700 points in New York at one stage. In Germany the Dax dropped 1.5pc, and the Paris market closed down 1.2pc.
Britain’s FTSe 100 index fared a little better with a drop of 0.6pc, or 39.61 points, to close at a twomonth low of 7163.68.
The falls wiped more than £770bn off the value of savings, pension funds and other investments around the world.
Samantha Azzarello, an analyst at JP Morgan, said: ‘China retaliating as fast as they did was a clear signal they’re not going to be pushed around.’
More than 470 big US stocks fell on Wall Street, with major exporters such as aircraft company Boeing and digger maker Caterpillar hit particularly hard. US products targeted by China include foodstuffs such as meat, roasted coffee and pasta. Beer, wine and gin have also been hit, along with chemicals and equipment such as vacuum moulding machines.
Meanwhile, Chinese consumers will be hit by higher tariffs on USmade televisions, headphones, DVD players, cameras and instruments such as pianos.
And American farmers were targeted, triggering sharp falls in soybean and cotton prices.
Trump claims China is gaming the global system by undercutting US factories with ultra-cheap exports and stealing trade secrets.
Washington and Beijing have spent months locked in trade talks, but last week these broke down as Trump claimed China was refusing to sign up to what had previously been agreed.
Yesterday Geng Shuang, of China’s foreign ministry, said there was no question of giving in. He said: ‘We have said many times that adding tariffs won’t resolve any problem. China will never surrender to external pressure.’
However, Trump threatened to take even tougher action to bring China into line. The White House is looking at tariff hikes for all remaining Chinese imports, estimated to be worth £230bn. Trump said on Twitter: ‘China should not retaliate – will only get worse. I say openly to President Xi and all of my many friends in China that China will be hurt very badly if you don’t make a deal because companies will be forced to leave China for other countries.’
It is feared the latest round of tariffs will damage global markets by putting up more barriers to trade and ultimately driving up prices for consumers.
even worse could be the damage it does to confidence.
rupert Thompson, of asset manager Kingswood, said: ‘There is a danger of miscalculation, with Trump overplaying his hand and the Chinese being unwilling to lose face. Somewhat surprisingly, the direct impact on economic growth of these tariff increases should not be that large.
‘rather, the main risk lies in the indirect effects on growth, stemming from the hit to business confidence and likely sell- off in equity markets.’