Global stocks are a sea of red on trade-war fears after Trump claimed that China ‘broke the deal’ – By Theron Mohamed (Business Insider) / May 9 2019
Global stocks and US futures fell after US President Donald Trump accused China of scuppering the two nations’ trade talks.
Stocks in Asia, Europe and futures in the US are slumping on Thursday after US President Donald Trump accused China of scuppering the two nations’ trade talks, fanning traders’ fears that his threatened tariff increases on Chinese goods will be implemented on Friday.
“China broke the deal,” Trump said at a rally on Wednesday night, doubling down on the White House’s assertion that Chinese officials reneged on agreed provisions in a draft trade agreement. He only plans to meet Liu He, China’s top trade negotiator who has traveled to Washington for talks this week, if the two sides make progress, according to Bloomberg.
“These comments clearly don’t bode well for the trade talks which are due to start today,” said Jasper Lawler, head of research at London Capital Group. He pegs the odds of the tariff hike — from 10% to 25% on $200 billion of Chinese goods — being introduced at 75%.
Investors are bracing for a broader downturn if the tariffs are passed.
“The markets are nervous of the impact that these actions will have on the health of the global economy, just as it is showing tentative signs of stabilizing following a period of slower growth,” Lawler said. “Should Trump go ahead with the tariff increase, we could expect equities to continue falling.”
The tariff increases would have a sudden and significant impact on China’s growth, undermining policymakers’ recent efforts to spur a recovery. The world’s second-largest economy has threatened to retaliate with “necessary countermeasures” if the US hikes tariffs, raising the prospect of a significant escalation in their trade war.
“If the two sides increase the tariffs on each other’s imports, growth on a global scale will take a hit,” said Konstantinos Anthis, head of research at ADSS.
