Stocks falter on yuan slide, new tariff threat

Fredrick Soto
July 23, 2018

Friday's losses came a day after Trump had also said he was concerned that the "Chinese currency was dropping like a rock", he did not like rising USA interest rates and that the strong USA dollar "puts us at a disadvantage". "Merkel and European Union officials joined China in stating that they would resist and retaliate against USA tariffs".

The Chinese yuan has also whipped around hitting its lowest levels this year, before rebounding strongly from its lows after President Trump's tweet storm earlier this afternoon.

Trump also doesn't mind voicing his concerns about global trade, particularly when he feels the playing field isn't level for U.S. exporters. Nine of the top 10 soybean-growing states in the USA voted for Trump, it highlights.

Still, new tariffs could help Trump's Republican party going into November's congressional elections. Both political and economic officials believe that the Fed needs to operate free of political pressure from the White House to properly manage interest rate policy.

The Chinese currency continued its sharp decline on Friday despite US President Donald Trump's bid to rein in the dollar, as analysts pointed out that a weaker yuan aids Beijing in its trade tussle with Washington.

But the president threatened to escalate the war even further yesterday when he vowed he was "ready to go to 500" on tariffs - a reference to the $500bn worth of products China exported to the USA in 2017.

"I'm not doing this for politics, I'm doing this to do the right thing for our country", Trump said.

"We've been ripped off by China for a long time", he added.

US PRESIDENT Donald Trump said on Friday he is willing to hit all Chinese goods imported to the United States with tariffs if necessary.

"China's reply to the latest proposed measures - proposed tariffs on $US200 billion worth of Chinese imports - has been hesitant", says Bhave, Harris and Qiao.

According to USA data, China imported only US$130 billion of United States goods, meaning that Beijing would eventually have to resort to non-tariff measures. A tariff is a tax on a good coming into the U.S., also known as a duty.

What to do when you when you don't have the same amount of imports to slug in return?

Trump has also threatened further tariffs on $200 billion in Chinese goods.

China has warned that India is raising a very big risk and it is not going to get anything from a friendly attitude with the U.S., but it can increase Beijing's resentment and the efforts to increase exports to China may also be a shock is. We expect some retaliatory tariffs, but in smaller amounts than the USA measures.

The Chinese textile suppliers who claim they were hired to manufacture the Trump themed hats and flags have complained that the delays at customs are negatively impacting their sales.

Along with the "stick" of retaliation, China might also offer the "carrot" of modest concessions.

Despite Africa's growing trade links with China, the dollar and euro dominate as trading currencies on the continent, according to a June report from Swift, a Belgium-based interbank messaging system used to move money around the world.

At the governor's conference in Santa Fe, emissaries from the Chinese government and enterprises warned that a trade war with China could lead to negative consequences for ordinary Americans, such as higher prices on consumer goods and greater inflation.

Here's a breakdown of how we got here and what the tariffs mean for the economy.

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