Trump threatens tariffs on all $500 bln of Chinese imports

Marcus Newton
July 23, 2018

Global markets have remained generally calm despite the eruption of a full-blown U.S.

US President Donald Trump ramped up his criticism of global monetary policy as well as his own central bank, saying in tweets that multiple nations are manipulating currencies to the detriment of the U.S.

Stocks have wobbled this week as investors reacted to solid company results and heightened trade tensions.

In Canada, the S&P/TSX Composite Index closed down 0.65 per cent to 16,435.46.

President Donald Trump has indicated that he is willing to slap tariffs on every Chinese goods imported to the US should the need arise."I'm ready to go to 500", the president told CNBC's Joe Kernen in a "Squawk Box" interview aired Friday. Like numerous Trump-related bluster and volatility, expect markets to experience a degree of exposure therapy to future Fed and currency comments, stripping them of much of their impact.

Trump's comments come in the wake of a growing rift between the two biggest economies. But it's something investors will have to think about.

"I'm not doing this for politics, I'm doing this to do the right thing for our country", President Trump said. "This is still in line with the broader PBOC policy of introducing more volatility and letting the market play itself out".

The S&P 500 Index slipped less than 0.1 percent to 2,801.83 as of 4:08 NY. The Dow Jones Industrial Average gave up 0.5 per cent to 25,064.50. The MSCI Emerging Market Index gained 1.1 percent. Bond yields are rising and the dollar is falling.

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2-year yield: U.S. 2.59% Australia 2.07%.

BONDS: Bond prices fell. The yield on the 10-year Treasury note rose to 2.86 percent from 2.85 percent. Instead, China's central bank helps guide the currency by setting a daily trading range.

The dollar dropped sharply, to 111.52 yen from 112.46 yen. The euro rose for a second day, gaining to $1.1655 from $1.644. The company said it's being helped by its rivalry with Amazon, because some retailers are reluctant to team up with Amazon on cloud computing services while they compete with Amazon in sales. The stock climbed 1.8 percent to $106.31. GE, which has been selling and splitting off businesses, also cut its forecast for how much cash its businesses will generate.

"I'm ready to go 500", the Republican leader told "CNBC", referring to the United States dollars 505.5 billion in Chinese imports into the U.S. in 2017. The bank concludes the combined impact of the $500 billion in tariffs Trump has threatened against China, the additional $275 billion in tariffs the White House is said to be mulling on auto imports, and the likely retaliation to those measures, would only reduce global growth 0.25 percentage points. The Trump administration is considering tariffs on another $200 billion in goods.

As the trade war escalates, so have analysts' estimates of potential economic consequences.

The People's Bank of China weakened the country's currency against the dollar on Friday. The figure is roughly double the value of Chinese products on which Trump has already imposed or threatened to impose tariffs-and almost equal to the total value of goods and services America purchased from China previous year. China promptly levied taxes on the same value of USA products.

The tweet marked the announcement that the U.S. would impose tariffs on steel and aluminum imports coming into the country - and the start of a growing trade war. Heating oil edged up 0.7 percent to $2.10 a gallon.

The Bloomberg Dollar Spot Index slumped 0.76 percent, the most since March 21. The US dollar lost to 0.9926 Swiss franc from 0.9990 Swiss franc, and it went down to 1.3127 Canadian dollars from 1.3252 Canadian dollars. Silver gained 1 percent to $15.55 an ounce.

Other reports by MaliBehiribAe

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