• Chinese state media on Thursday accused the United States of a “mobster mentality” in its move to implement additional tariffs on Chinese goods, and warned Beijing had all the necessary means to fight back.
The comments mark a ratcheting up in tensions between the world’s two largest economies over a trade dispute, which is already impacting industries ranging from steel to cars and causing unease over which products could be targeted next.
China is slapping additional tariffs of 25 percent on $16 billion worth of U.S. imports from fuel and steel products to autos and medical equipment, the Chinese commerce ministry said, as the world’s largest economies escalated their trade dispute.
• Gary Hufbauer, a senior fellow and trade expert at the Peterson Institute for International Economics in Washington, said he expected that there would be little to stop further escalation of the U.S.-China tariff war as both sides dig into entrenched positions.
“My expectation is that U.S. tariffs on $250 billion of imports from China will be in effect about a month prior to the November U.S. elections. That’s soon enough to be used by Trump as a rallying argument, but late enough so that adverse effects will not occur before January 2019. Of course, China will retaliate, probably dollar for dollar,” Hufbauer said.
China, however, would run out of U.S. imports to levy, as it bought only $130 billion worth of American goods last year. It would likely have to impose penalties on U.S. companies doing business in China to make up the difference.
• China’s yuan will regain some of its recent sharp losses against the dollar and appreciate over the next year, but only if trade tensions between the Washington and Beijing subside, a Reuters poll found on Thursday.
The yuan has weakened almost 5 percent so far this year and hit a 14-month low last week, primarily driven by new tariff threats from the U.S. and retaliatory warnings from Chinese authorities.
• Sterling dropped to its lowest levels in almost a year on Wednesday on concerns about Britain’s exit from the European Union, while the dollar dipped against a basket of currencies.
The dollar index rose as high as 95.417, near a more than one-year high of 95.652 hit on July 19, before dropping back to 95.058, down 0.16 percent on the day.
The yuan weakened by 0.08 percent on the day to 6.8256 per dollar.
• Oil prices slumped on Wednesday after Chinese import data showed a slowdown in demand and weighed on world equity markets, which traded near break-even as U.S. technology shares extended recent gains.
In the oil market, the U.S.-China trade fight weighed on prices. U.S. crude fell $2.23 to settle at $66.94 per barrel and Brent settled at $72.28, down $2.37 on the day.
• Japan’s core machinery orders tumbled in June at the fastest pace in six months, with companies expecting a further modest drop in the third quarter in a discouraging sign that capital expenditure may slow.
Reference: Reuters
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