Beijing retaliates with tariff on $60bn US goods
Trade relations between the two leading economic power, United States and China further strain as Beijing retaliate with increase in tariff on US $60 billion worth of goods.
The reprisal economic attack target on trade value is deepening an already battered relationship between China and United States of America.
China will impose tariffs on a total of 5,140 US products from June 1, the finance ministry said in a statement.
Meanwhile, Donald Trump predicted Tuesday that the U.S. will notch a trade victory in what he described as ‘a little squabble with China.’
Speaking to reporters as he left the White House, the president grinned as he asked: ‘You want to know something? You want to know something? We always win.’ And Trump warned that he might stack even more tariffs on a growing pile of anti-China duties in order to put additional pressure on Beijing. ‘We’re looking at it very strongly,’ Trump said.
Last week, despite ongoing trade talks since December 2018 and scheduled meetings in the past week, the U.S. imposed trade tariffs on $200 billion worth of Chinese goods. The tariffs on more than 5,700 goods were increased from 10.0% to 25.0%.
This, an attempt by the United States, US, to extract further trade concessions from China, suggesting that the possibility of a breakthrough is unlikely in the near-term. Unsurprisingly, China has announced intentions to retaliate.
Some analysts have warned the US tariff hikes could disrupt a Chinese recovery that had appeared to be gaining traction. Growth in the world’s second-largest economy held steady at 6.4 percent over a year earlier in January-March, supported by higher government spending and bank lending
Afrinvest, one of the foremost investment banking firm in Nigeria said; “We note that the breakdown in trade talks means that the uncertainty created by the trade war would persist, with implications for global growth and financial market performance. Hence, we expect monetary conditions to remain accommodative in advanced economies, supporting continuous capital inflows into emerging and frontier economies”.
Given the heightened trade tensions, the performance of developed markets was bearish across board. In the US markets, the S&P 500 and the NASDAQ closed the week lower, down 3.5% and 4.1% week on week respectively while the UK FTSE fell 2.2% week on week.
Similarly, France’s CAC 40 (-4.0% W-o-W), Germany’s XETRA DAX (-3.0% W-o-W) and Japan’s Nikkei 225 (-4.1% W-o-W) declined during the week. Additionally, Hong Kong’s Hang Seng recorded a loss of 5.1%.
Across the Brazil, Russia, India, China and South Africa (BRICS) market, performance was equally bearish as all indices under analysts coverage trended southwards. The China Shanghai Composite suffered the steepest decline of 4.5% week on week, following new tariffs on Chinese exports to the US.
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Similarly, South Africa’s FTSE/JSE All Share fell 4.1% W-o-W, India’s BSE Sens index shed 3.9%, the Russia RTS was down 2.8% and the Brazil Ibovespa declined 2.4%.
Across the African market, performance was largely bearish as 4 out of 6 markets under Afrinvest analysts’ coverage were negative week on week. The Morocco’s Casablanca MASI led gainers, up 0.7%, due to the collaboration between Morocco and Spain to promote a common migration policy within the framework of the European Union (EU).
The Mauritius SEMDEX index trailed, up 0.1%. On the other hand, the Egypt EGX30 led decliners, down 5.5%, followed by the Nigeria All-Share Index (-1.2% W-o-W) and Kenya NSE 20 (-0.6% W-o-W). Finally, Ghana’s GSE Composite extended its bearish run, down 0.3% during the week.
In Asia and the Middle East, there was a reversal in performance from last week as all markets recorded gains W-o-W. The Turkey’s BIST 100 recorded the largest gain of 6.2% W-o-W, followed by Saudi Arabia’s Tadawul ASI which advanced 5.4% W-o-W.
Similarly, Qatar’s DSM 20 index rose 4.5% W-o-W while the UAE’s ADX General Index inched higher by 3.8% W-o-W. Finally, Thailand’s SET index closed the week on a positive note, up 2.0%.
