Despite China’s deputy finance minister stating that a trade war would be ‘lose-lose’ for the US and China, this didn’t stop the latter from continuing the week’s aggressive tit-for-tat tariffing. And boy were the markets not happy about it.
Soybeans, whisky, cigars, chemicals and SUVs are just some of the 106 different US products targeted by China – imports that totalled $50 billion in 2017 – as the country responded to Trump’s own measures announced last night (a retaliation to China’s Monday tariffs unveiling (which, of course, were in turn were sparked by the President’s opening shot in March)). What’s especially alarming is the gathering pace of this exchange, especially with someone as trigger happy as Trump at the tiller.
Understandably the markets were deeply disturbed by the speed and extent of China’s response, with Europe’s initially mild losses turning pretty damn severe as Wednesday went on. The FTSE was the most stoic, and even then the UK index still suffered a 0.8%, 7000-abandoning decline. As for the Eurozone, the CAC shed 1%, while the DAX completely lost its bottle with a 200 point plunge.
And things could get even worse once the US joins the fray this afternoon. The Dow Jones is staring at a stomach-churning 550 point bloodbath when the bell rings on Wall Street, a dramatic move lower that would send the index back to the sub-23450 levels it briefly struck on Easter Monday.
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