Economy

Markets calm amid hopes for US-China talks

Markets calm amid hopes for US-China talks”

US President Donald Trump increased on 10 May tariffs on around $200 billion worth of Chinese imports from 10 percent to 25 percent.

This week, "trade war" is again spiking, the analysis showed.

China announced on Monday it would raise tariffs on US$60 billion (S$82 billion) in United States exports by next month, responding in kind to President Donald Trump's decision last week to hike duties on hundreds of billions of dollars in Chinese merchandise.

Washington wants Beijing to roll back plans for government-led creation of Chinese global competitors in robotics and other technology that its trading partners say violate its free-trade commitments.

A stumbling block has been USA insistence on an enforcement mechanism with penalties to ensure Beijing carries out its commitments.

Last week's trade negotiations between the delegation from China and the US delegation seemed to have lost ground and moved farther away from a resolution, the opposite of the desired outcome.

Asian stock markets remained under pressure on Tuesday, but European indexes recovered some ground, with London's FTSE 100 up 0.8%, Germany's Dax 0.4% higher, and the French Cac 40 up 0.9%.

If the U.S. thinks it "can achieve its goals with trade bullying, it is really underestimating the will and determination of the Chinese people to defend their core interests", the editorial said.

Trump in a tweet on Tuesday had said, "We have placed a 25 per cent tariff on "dumped" steel from China and other countries, adding that in one year tariffs have rebuilt our steel industry - it is booming!"

China's vice-premier, Liu He, listens to U.S. Trade Representative Robert Lighthizer as they exit the office of the U.S. Trade Representative on Friday.

No matter what Washington and Beijing decide, "there is an enormous risk in the background that tariffs could come back into play at any moment", he said. China main market index lost 0.7 per cent while Tokyo's benchmark declined 0.6%. Hong Kong, Australia and Taiwan also fell.

In New York, the Dow Jones industrial average was up 207.06 points at 25,532.05, a day after losing 617.38 points. Details of what the duties were before the increases were unclear. Speaking at a White House dinner, Trump noted that Treasury Secretary Steven Mnuchin, who was attending the event, returned from trade talks in China two weeks ago. Trump said Monday he Xi would meet during the Group of 20 meeting of major economies on June 28 and 29 in Osaka, Japan. Trump wrote that Beijing "had a great deal, nearly completed, & you backed out!"

Most observers have warned a trade war between the world's two largest economies could shatter global economic growth, and hurt demand for commodities like oil.

"We are keeping a close eye on this next round", said E-Blox Chief Operating Officer Joe Seymour.

The two governments have given themselves a few more days to make peace before their latest tariff hikes hit.

The time before then will be "highly volatile" for financial markets, said Macquarie Bank analysts in a report. "Remember, they broke the deal with us & tried to renegotiate".

The June gold contract was down US$5.50 at US$1,296.30 an ounce and the July copper contract was up 0.6 of a cent at US$2.72 a pound. The U.S. increases apply to Chinese goods shipped starting Friday, which will take about three weeks to cross the Pacific and arrive at U.S. ports.

For months, as American and Chinese officials faced off at the negotiating table, China's media downplayed the trade tensions.

Beijing is running out of imports to penalize due to the lopsided U.S. Chinese regulators have instead targeted American companies in China by slowing down the clearing of shipments through customs and the processing of business licenses.



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