China is clearly unhappy with the US breaking established trade agreements. Washington promised to impose no further tariffs on Chinese goods during their meeting in Osaka at the end of June, but a few days ago they reneged, slapping an additional 10% on $300bn worth of imports. This article, whilst clearly biased to favour Beijing, points out fairly that the decision was backward and disruptive for both sides and also globally. In fact, the US markets dropped because of it. The authors claim that such US behaviour will be detrimental to business confidence, hindering big-ticket investment for now.
Why does this matter? The US backtrack possibly triggered China’s currency devaluation as a way to soften the blow of the extra tariff. Following up on this, Charles Hankla, a political scientist from Georgia State University, doesn’t see an end of the war in sight. He writes that a trade war can only be won if one country has more bargaining leverage than its opponent. And he doesn’t believe that’s the case here.
(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)
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