Since the Trump administration first announced that the U.S. would strongly consider raising tariffs on Chinese goods from 10% to 25%—and significantly expand the list of goods covered—the U.S. equity market has seen a jump in volatility and significant losses.
Research firm Statista outlined on May 10 the lead-up to this particular chapter in the U.S.–China trade relationship:
Source: Statista, based on information from Bloomberg, CNN.
On Monday, May 13, 2019, news broke of China’s most recent retaliatory action. MarketWatch wrote,
With the exception of 2009, the dollar volume of trade goods imported from China has increased steadily over the past 11 years, making this a negotiation with increasingly higher stakes.
Source: Statista, based on data from the U.S. Census Bureau and U.S. Department of Commerce
The New York Times noted last week that U.S. consumers, who so far have largely not felt the direct impact from the tariffs on Chinese goods, will probably notice the results of the most recent escalation. The Times reports,
While consumers will likely find a noticeable price increase on certain grocery store items originating from China, the largest categories of goods to be hit, according to the BBC, are various types of hard goods and technology and industrial products.
Source: BBC, based on data from the U.S. International Trade Commission
The BBC also notes that while the U.S.–China trade war has “weighed on investor confidence around the world,” the indexes of the major China equity exchanges suffered more than U.S. equity markets—at least up until the most recent action this week.
According to CNBC, “President Donald Trump and Chinese President Xi Jinping are likely to meet at the June G-20 summit in Japan, White House Economic Advisor Larry Kudlow said in a Fox News interview on Sunday. Kudlow said the chances of such a meeting ‘were pretty good,’ but he said there are ‘no concrete, definite plans’ for when U.S. and Chinese negotiators will meet again.”
Source: BBC, based on Bloomberg data compiled the week of May 6, 2019.
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