- Donald Trump announced 34% in new tariffs against China in his “Liberation Day” speech.
- Beijing responded with 34% duties on US goods, set to take effect Thursday.
- Trump today threatened new 50% tariffs on China, sending global stocks into a third trading day of heavy losses. Hong Kong collapsed by 13.2%, while the Dow Jones and S&P 500 were lower.
US President Donald Trump on Monday (Tuesday NZT) threatened new tariffs of 50% on China, ratcheting up a trade war even as a dramatic selloff in global markets gathered pace.
Finance Minister Nicola Willis has issued a briefing this morning on the impact of the US tariffs on the New Zealand economy, attempting to reassure Kiwis that while “unwelcome” the impacts are likely to be “modest” compared to those felt by other countries.
The New Zealand dollar sank to its lowest point for the year when it hit US55.07c overnight as world markets continued to balk at the introduction of high tariffs from the United States.
Trump has urged Americans not to panic despite trillions of dollars being wiped from global markets.
The New Zealand sharemarket was flat in its first hour of trading after falling 3.68% yesterday – its largest drop since March 2020.
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Salt Funds Management managing director Matt Goodson said the market is as volatile as anything.
”It’s sort of interesting because when our market closed yesterday, US futures were fluctuating in a range of 3.5 to 4% down, whereas the market actually was closed relatively flat.
”The market had a huge interest trading range, and their futures for tomorrow have just opened up by 50 points. So it’s all over the show and that’s something that investors hate, that volatility.”
Goodson said the biggest change overnight was a very sharp sell-off in US bond yields. US 10 year bonds sold off about 22 points, and our 10 years have followed that to a degree.
Trump upends world economy - AFP
Trump upended the world economy last week with sweeping tariffs that have raised fears of an international recession and triggered criticism even from within his own Republican Party.
In response to Trump’s tariffs, Beijing – Washington’s major economic rival – unveiled its own 34% duties on US goods to come into effect on Thursday.
The US President on Monday chastised China for not heeding “my warning for abusing countries not to retaliate”.
He said on social media that if China did not immediately back down “the United States will impose ADDITIONAL Tariffs on China of 50%, effective April 9th”.
With the incoming 34% rate and new 50% threat, the total additional tariffs this year could hit 104%, the White House told AFP.
Hong Kong collapses
Stock markets and oil prices collapsed further, as trading floors across the world were overcome by waves of selling after last week’s sharp losses.
Hong Kong’s Hang Seng Index fell 13.2% in its worst day in nearly three decades.
Tokyo’s Nikkei 225 fell 7.8% and the Shanghai Composite was down 7.3%.
London’s FTSE 100 finished 4.4% lower.
New York stock markets opened to drops of over 3%. The Dow finished down 0.9% and the S&P 500 fell 0.2%. The tech-heavy Nasdaq mustered a modest gain of 0.1%.
‘Don’t be weak’
“Don’t be Weak! Don’t be Stupid!” Trump urged Americans minutes before Wall Street opened.
“Be Strong, Courageous, and Patient, and GREATNESS will be the result!”
Trump scrapped any meetings with China over its retaliation, but said the United States was ready to open talks with all countries willing to negotiate.
A 10% “baseline” tariff on US imports from around the world took effect on Saturday but a slew of countries will be hit by higher duties from Wednesday, with levies of 34% for Chinese goods and 20% for EU products.
Chinese Vice Commerce Minister Ling Ji said its tit-for-tat duties “are aimed at bringing the United States back on to the right track of the multilateral trade system”.
“The root cause of the tariff issue lies in the United States,” Ling told representatives of US companies on Sunday.
EU trade ministers gathered in Luxembourg on Monday to discuss the bloc’s response, with Germany and France having advocated a tax targeting US tech giants.
“We must not exclude any option on goods, on services,” said French Trade Minister Laurent Saint-Martin.
The 27-nation bloc should “open the European toolbox, which is very comprehensive and can also be extremely aggressive,” he said.
But signs of divergence emerged from Ireland, whose low corporate tax rate has attracted US tech and pharmaceutical companies.
Targeting services “would be an extraordinary escalation,” said Irish Trade Minister Simon Harris.
Inflation? Recession?
Bitcoin tumbled, while the dollar rebounded after sharp losses last week.
The 78-year-old Republican believes that the tariffs will revive America’s lost manufacturing base by forcing foreign companies to relocate to US soil, rather than making goods abroad.
But most economists question his theory and say his tariff figures on importing countries are arbitrary.
JPMorgan Chase CEO Jamie Dimon warned the tariffs “will likely increase inflation”, in a letter to shareholders.
“Whether or not the menu of tariffs causes a recession remains in question, but it will slow down growth,” he said.
“The market’s telling you in plain language: global demand is vanishing, and a global recession is on the cards and coming on fast,” said Stephen Innes at SPI Asset Management.
US Senator Ted Cruz – a staunch Trump loyalist – warned of a jobs crunch and rising inflation that would threaten the Republican hold on Congress.
Benjamin Netanyahu, Prime Minister of Israel – hit with 17% tariffs despite being one of Washington’s closest allies – was due on Monday to become the first leader to meet Trump since last week’s announcement.
- Agence France-Presse
