The stock markets haven’t been looking the brightest ever since the U.S. and China trade war began. The tariffs between the two countries still remain distant threats as the two leaders, President Trump and Chinese President Xi Jinping, stand at an impasse for over four months now. Unfortunately, it doesn’t look like the two countries will be agreeing on anything anytime soon, last week China promised retaliation for the U.S.’ tariffs and this week they released plans to 25 percent, from the previous 10 percent, by the first of June.
A Great Deal
I say openly to President Xi & 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. Too expensive to buy in China. You had a great deal, almost completed, & you backed out!
— Donald J. Trump (@realDonaldTrump) May 13, 2019
On Monday, China said that it had plans to raise tariffs on $60 billion in goods from the U.S. this act by China was retaliation for the U.S. raising their tariffs on Chinese goods recently. By June 1 China plans on raising their tariffs to 25 percent, up 15 percent from what it is currently.
The promise to raise tariffs has startled investors, causing stock futures to drop. Dow Jones Industrial Average futures are expected to drop off about 450 points at the opening. S&P 500 futures look to lose 1.5 percent, while Nasdaq 100 futures show a drop of 2 percent. [1]
The Trade War
The White House economic adviser, Larry Kudlow, has said that Trump and Chinese President Xi Jinping will be meeting in Japan at the June G-20 summit. Kudlow went on to say that although the chances of them meeting “were pretty good” there were “no concrete, definite plans.”
..There will be nobody left in China to do business with. Very bad for China, very good for USA! But China has taken so advantage of the U.S. for so many years, that they are way ahead (Our Presidents did not do the job). Therefore, China should not retaliate-will only get worse!
— Donald J. Trump (@realDonaldTrump) May 13, 2019
“No one wins from a trade war, although China stands to lose more,” said Chen Zhao, chief global strategist at Alpine Macro. “The odds of a China-U.S. trade accord remain significant, even though tariffs are being raised,” he added. [2]
Notes:
- ^Dow tumbles more than 600 points https://www.cnn.com/2019/05/13/investing/dow-stocks-today/index.html (go back ↩)
- ^Fred Imbert, Cnbc. “Dow futures fall 450 points after China says it will raise tariffs on $60B of U.S. goods.” NBC News, 13 May. 2019, www.nbcnews.com/news/amp/ncna1004841. (go back ↩)
