Trade War China, US Escalates With Beijing Imposing 125 Percent Tariffs; Markets React
By Stefan J. Bos, Chief International Correspondent Worthy News
BUDAPEST/BEIJING/NEW YORK (Worthy News) – The standoff between the world’s largest economies turned into a full-fledged trade war Friday, with China raising tariffs on imported goods from the U.S. to 125 percent and claiming further American levies would be seen around the globe as a “joke.”
The Dow industrials, the S&P 500, and the tech-heavy Nasdaq Composite indexes in New York were all muted in morning trading, with more dramatic moves in other markets, such as gold and the dollar.
The U.S. bond market remained under pressure, with benchmark 10-year Treasury yields briefly topped 4.5 percent. In Europe, the Stoxx Europe 600 index edged down in global markets, while Japan’s Nikkei 225 index dropped 3 percent to close the week. The dollar extended its weeklong decline.
In corporates, influential JP Morgan announced it put aside $973 million in the first quarter of this year to help protect the U.S. bank from potential defaults by its borrowers amid a worsening economic outlook.
That marked a sharp shift from last year, when a brighter outlook reportedly led to the release of $72 million from its reserves.
Analysts said it comes amid concerns that customers could struggle to repay their loans if new sweeping tariffs harm economic growth.
Yet a real roller coaster was seen in Europe where investors seemed to enjoy a brief morning rally in stocks only to make a significant u-turn to dump British, German, and French stocks an hour later after China announced retaliatory moves, raising tariffs on US goods to 125 percent from previous levels of 84 percent.
Trump escalated tariffs on China, saying the US will now charge an extra 145 percent on all Chinese goods arriving there. The move came after the rest of the world received a 90-day respite.
Trump told reporters on Thursday that he is looking to cut a deal with Chinese President Xi Jinping and that he is hopeful to “end up working out something that’s very good for both countries.”
However, not seeking to look weak, China’s authoritarian leader wasn’t in a hurry to make the call. “For over 70 years, China’s development has relied on self-reliance and hard work – never on handouts from others, and it is not afraid of any unjust suppression,” Xi said, according to state broadcaster CCTV during his meeting with the Spanish prime minister.
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