The Trump administration has announced higher tariffs on $50 billion in Chinese export and promised additional restrictions on Chinese investments. China immediately promised to impose tariffs with “equal scale, equal intensity” on U.S. exports. The Commerce Ministry added that all of the country’s earlier trade commitments are now off the table.
The first wave of U.S. tariffs will hit $34 billion in Chinese goods on July 6 with another $16 billion still under review. The final list includes 1,102 product lines, down from about 1,300 initially, mainly focused on technology industries such as robotics, aerospace, industrial machine and autos that are at the heart of China’s Made In 2025 plan to become dominant in high-technology industries.
“Our hope is that it doesn’t lead to a rash reaction from China,” U.S. trade representative Robert Lighthizer said in an interview on Fox Business Network today. Most Asia analysts see the escalation of the U.S.-China trade war as ending any chance that China will exit itself to put pressure on North Korea to produce concrete progress in ending its nuclear program.
As of 12:40 p.m. New York time the Standard & Poor’s 500 was off 04% and the Dow Jones Industrial Average was lower by 0.87%. The Nasdaq Composite index was lower by 0.33%.
The yield on the 10-year U.S. Treasury slipped 2 basis points to 2.92% as some cash moved to the safety of the Treasury market.
Considering that it’s a Friday–and no one wants to be long much of anything during a weekend–and that today is triple-witching day for options expirations the market’s reaction is actually very muted. The consensus seems to be that this is all saber rattling that the two countries will avoid a full-out trade war.
