Global Trade Tensions Escalate
A bear in Wall St. indicates that the stock market believes companies are facing reduced profits in the future. Image by Editor.
China’s Retaliatory Tariffs
China has added a new 34% tax on goods from the United States. It says the U.S. tariffs break global trade rules known as GATT and that the US should come back to the negotiating table.
This news caused European stock markets to fall quickly. Firstly markets opened in Europe. In London, traders are worried as prices keep dropping taking value off major British firms.
US Stock Market Reaction
When the US stock markets opened this morning the major indexes all opened 3-4% lower than they closed after yesterday’s torrid trading, during which trillions of dollars were wiped off the value of the stock market and major tech companies like Apple (AAPL) took a 10% beating.
International Responses
The UK is still in talks with the U.S. Foreign Secretary David Lammy says these talks are important for the UK as the UK still hopes to have a tariff reduction as it does not have a trading surplus with the US.
In other places, like Spain and Taiwan, governments are giving money to local businesses to help them deal with the effects of the tariffs.
Trump’s Response
What about Trump? Speaking on Air Force One yesterday, he said the word “boom” three times—about the market, stocks, and the U.S.—to show he thinks his tariff plan is working. He believes that trillions of dollars will flow to the US government as a result of tariffs, but seems to ignore the fact that it will be American consumers who will have to pay and that the tariffs may trigger economic collapses in overseas markets.
Meanwhile, Trump publishes a flurry of posts on his Truth Social account, with his latest one hitting back at China’s move to slap retaliatory tariffs on the US.
“China played it wrong, they panicked,” Trump says. “The one thing they cannot afford to do!”
Reporters traveling on Air Force One asked Trump when he last spoke to President Xi of China, but Trump said it was often, but he did not exactly remember the last time.
Sources
Sources: BCC, CNN. MarketWatch.
Conclusion
The escalating trade tensions between the US and China have caused significant volatility in the global stock markets. The situation remains uncertain, with both countries imposing retaliatory tariffs on each other’s goods. The impact of these tariffs on the global economy and international trade remains to be seen.
Frequently Asked Questions
Q: What is the current state of the US-China trade war?
A: The US and China are engaged in a trade war, with both countries imposing tariffs on each other’s goods.
Q: How have the stock markets reacted to the trade war?
A: The stock markets have been volatile, with significant losses in the US and European markets.
Q: What is the impact of the tariffs on American consumers?
A: The tariffs may lead to higher prices for American consumers, as companies pass on the increased costs to their customers.
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