Finance

Trump's latest swipe at Canada? Smuggling US shoes

Trump's latest swipe at Canada? Smuggling US shoes

The US-China trade frictions escalated further over the weekend and we are unfortunately moving away from the "Grand Bargain" scenario towards the "trade war" scenario.

The Dow sank 287 points on Tuesday, or 1.2%.

Industrial and technology companies took some of the worst losses as investors anxious that the dispute could grow more intense and drag down global economic growth.

ASIA'S DAY: Japan's benchmark Nikkei 225 index rebounded 1.2 percent to close at 22,555.43 and South Korea's Kospi gained 1.0 percent to 2,363.91.

Shanghai stocks staged a modest 0.3 percent recovery after tumbling almost 4 percent on Tuesday to a two-year low, buoyed by soothing comments from the central bank chief and in state media, and a burst of share purchase plans.

Oxford Economics estimates that if President Donald Trump imposed the $200 billion in duties that he threatened to implement late Monday, and China responded in kind, USA growth could slow by 0.3 percentage point next year.

Investors sought safer investments, such as high-dividend companies like utilities and companies that make and sell household goods.

Investors are also assessing the impact of tightening monetary policy by central banks after the US Federal Reserve raised interest rate last week and the European Central Bank said it planned to end its bond-purchase program at year-end.

Stocks are ending mostly higher Wednesday, although the Dow Jones industrials are posting a seventh straight loss due to weakness in McDonald's and Travelers.

"When you get in a fight with your biggest buyer of agriculture, and the world's largest soybean buyer (China), even if (it) were to buy 20 percent less, it's a big deal", said Dan Basse, president of Chicago-based consultancy AgResource Co. Construction equipment maker Caterpillar closely followed with a 3.6 percent drop.

Shares of Chinese companies listed in the USA slumped.

Global stock markets fell with US bond yields and agricultural commodities on Tuesday, while the dollar rose and investors flocked to safety in the face of a rapidly escalating U.S. US crude oil is up 1.3 percent, after dropping 1.2 percent a day earlier. About 60 percent of USA soybean exports go to China.

US stock markets are opening sharply lower Tuesday as tensions over trade between the USA and China seem closer to a boil.

The rhetoric weighed on Chinese stocks on Tuesday, with the Shanghai Composite Index plunging to a two-year low and the yuan coming under pressure.

China doesn't import enough goods from the U.S.to match the scale of Trump's proposal but could adopt other methods.

The US leader warned Friday of "additional tariffs" should Beijing hit back with tit-for-tat measures.

In a separate statement, Lighthizer said that he supported Trump's action and that his agency "is preparing the proposed tariffs to offset China's action".

"If the United States loses its senses and comes up with a new list, China will be forced to strike back hard, and launch comprehensive measures that match the USA move in quantity and quality", the Chinese Commerce Ministry said in a statement Tuesday. The yield on the USA 10-year Treasury fell to 2.89 percent from 2.92 percent.

Shanghai-based hedge manager David Dai said the rapidly escalating trade tensions between Washington and Beijing have added woes to an already fragile stock market and make calling the bottom very hard.

On Friday, after the Trump administration's first tariff action, Beijing responded with reciprocal tariffs on $50 billion in US goods, including cars, soybeans, dairy, oil, propane and other high-value trade categories.


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