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The US has reignited the trade war prompting a fall in Asian stocks

by | 30 May, 2018

President Trump speaks during a Memorial Day event. Credit: Arlington National Cemetary

Much to the chagrin of China, the US is intending to move ahead with its steel and aluminium tariffs on nations including both China and Japan, as they haven’t addressed their trade practices to a degree America is happy with.

President Xi of China may be confused, given that US Treasury Secretary Steven Mnuchin recently said the US was putting the trade war ‘on hold’ while the 2 sides worked on future trading arrangements, in many private meetings that have taken place in both Beijing and Washington in recent weeks. However, given the unpredictability of the Trump administration, this is par for the course.

Punishing both China and Japan with tariffs at a time when it needs their aid in dealing with North Korea is a curious and high risk strategy. However, if Trump manages to win on trade by making China and Japan negotiate fairer terms, alongside securing peace on the Korean Peninsula through dialogue with Kim Jong-un, it will put the Republican party in a strong position for the upcoming midterm elections, alongside boosting his approval ratings.

China’s SSE Shanghai Composite fell again today in response to the news and is down 3.99% for the week so far.

The price of gold has also risen as investors flee to safe haven assets in the wake of political uncertainty in both the US and Italy (see the chart).

Gold prices are up 0.85% for the week

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ALL RIGHTS RESERVED © INVSTR LTD. 2018

Risk Disclosure:
Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order.
Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.
Brokerage services are provided by the following:
US-traded securities, including fractional trading, are provided to Invstr users by DriveWealth LLC, a regulated member of FINRA/SIPC. DriveWealth may not establish investment accounts to residents of certain jurisdictions. For more information, including disclaimers, risk and transaction fees click here.
India account traded securities are provided by SIC Stocks & Services PVT Ltd. SIC does not make any personal recommendations to buy, sell or otherwise deal in investments. Investors make their own investment decisions. The services and securities provided by SIC may not be suitable for all customers and, if you have any doubts, you should seek advice from an independent financial adviser. For more information and disclaimers, click here.

 

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