Trade War Escalates, Shaking Markets
Asian markets opened lower on Wednesday after reports out of Washington confirmed that the United States would impose tariffs on another $200 billion of Chinese imports. The move escalated the trade war between the U.S. and China and sent traders flocking to safe haven currencies, including the yen. The dollar was down 0.06 percent against the yen as of 9:50 a.m. HK/SIN, to 110.92, retreating from its perch near a two-month peak above the 111 mark. Analysts were concerned that the yen could rise further as traders analyzed the potential impacts of the trade war. The yen was also higher against the euro to trade at 130.08.
On Tuesday the Trump administration released a list of Chinese goods that will face a ten percent tariff once confirmed in about two months’ time. The announcement came only days after Trump’s first round of tariffs went into effect last Friday. The newly-targeted Chinese goods were selected to be especially harmful to the Chinese economy, CNBC reported. An unnamed Washington official said that the Trump administration has been extremely clear to China in terms of its concerns and demands about trade, but that China has not responded.
"For over a year, the Trump Administration has patiently urged China to stop its unfair practices, open its market, and engage in true market competition," U.S. Trade Representative Robert Lighthizer said in a statement.
Asian markets were broadly lower after the announcement, with the Shanghai Composite plummeting over 2 percent in early trade before reversing slightly. The index was down 1.89 percent before 10 a.m. in Hong Kong. Japan’s Nikkei 225 and Hong Kong’s Hang Seng Index suffered similar losses, falling 1.77 percent and 1.92 percent respectively. South Korea’s Kospi slumped 1.28 percent and Australia’s ASX 200 sloughed 0.70 percent. U.S. stock futures were also lower, with expectations to break Wall Street’s recent winning streak.