Global markets were seeped in the red on Wednesday as investors feared that a trade war between China and the US was about to start. China has hit back with counter-measures against the United States, targeting 106 US imports worth 50-billion dollars.
This followed the Trump administration announcing on Tuesday that it would impose import tariffs on 1 300 Chinese products. It has been a bloody session on global markets. This is as the two economic giants of the globe face off in a trade war.
Both China and the US have published lists of products that will be affected by each country’s import tariff measures, both countries are targeting up to 50 billion dollars’ worth of goods per year. First the US made the move of targeting 1 300 Chinese products, including industrial, transport and medical goods.
Then China responded in less than 24 hours on Wednesday morning, targeting 106 US goods, including soybeans, China imports a third of the US’s soybean total exports.
Last year US soybean exporters made a whopping 13.5 billion dollars from that market. China also identified aircraft which will be a big knock for Boeing, and US vehicles, among other products.
There are fears that this tension will ripple through into broader global trade. “People need to realise that China itself for them to respond within 11 hours, that escalated the fear and, more importantly, you get most of Asian countries taking their things to China where it’s more of an assembly hub and China then exports to the world and mainly to the US, so it’s not just a question of China that will be implicated, then we’ve got other Asian countries there as well. And China itself being the main consumer of commodities, it becomes a problem for countries like SA as well, because we know our major exports are commodities and to the likes of China,” says Portfolio Manager Makwe Fund Managers Makwe Masilela.
It is hoped that fierce negotiations between US and Chinese officials can stop the implementation of these policies, which currently sit on paper. A date on which they are to be given effect has yet to be stated and with the stakes as high as they are, perhaps an implementation date won’t be forthcoming anytime soon.
However, as the uncertainty continues, more volatility on global markets is expected, more fear and more sell offs. Click below for more on the story: