Trade War Fears Heat Up as Trump Eyes China

Sara Patterson

U.S. President Donald Trump is mulling the possibility of tariffs on up to $60 billion on 100 products of Chinese imports in the telecommunications and technology sectors. The proposed tariffs are based upon findings from an investigation by U.S. Trade Representative Robert Lighthizer which was formed to determine whether China’s practices are discriminatory or restrictive for U.S. commerce. The Trump administration has not yet publicized the size or timing of the tariff. As reported by CNBC, Trump vetoed proposals of tariffs on $30 billion of Chinese imports, claiming that more aggressive tariffs are necessary.

Asian indexes reacted to the speculation by heading lower with Hong Kong’s Hang Seng Index leading the charge with a 1.30 percent drop as of 2:22 p.m. HK/SIN. The Nikkei was down 0.87 percent, the ASX 200 was down 0.66 percent and the Shanghai Composite was down 0.39 percent. Further pressuring global markets was the ousting of Rex Tillerson as U.S. Secretary of State on Tuesday. He was replaced by former CIA Director Mike Pompeo.

The heightened possibility of a trade war and Tillerson’s departure reduced investor risk appetite, even as U.S. inflation data released on Tuesday showed an annual core inflation of 1.8 percent, which met expectations and would have likely increased risk appetite under a different political climate.

The dollar was modestly lower against its primary trading partners, declining 0.03 percent against the yen to 106.53, and trading at $1.2396 against the euro. The euro hit a one-month peak overnight of $1.2446 before easing slightly.

Sara Patterson
Sara Patterson has a Master’s Degree in political science and enjoys analyzing both current events and the international markets to get a fuller perspective of the currency market. Before turning to financial writing, she taught English writing skills to high-school age students. Sara’s work has been published on various financial and Forex blogs.

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