International capital markets are grappling with fast increasing trade tensions. Recent reports confirm what we all know – that the United States are still losing the trade with China at record levels. Over the previous year the U.S. imported approximately $440 billion in goods from China. By comparison, its goods exports to all of China were only $145 billion. The U.S. government has attempted to address this imbalance by slapping high, sweeping tariffs on several imports. This action does nothing but add to the already confusing global trade landscape.
The U.S.-China trade war has escalated quickly in recent weeks. Both countries have moved to implement punishing tariffs that would obliterate a significant portion of their bilateral commerce. The U.S. took their retaliatory tariffs a step further by recently raising their tariffs on Chinese goods to an astounding 125%. They said China’s “disrespect” for “the World’s Markets” was behind this move. In retaliation, China has retaliated with its own tariffs, further flaring the tense relationship between the two global economic powerhouses.
All the while, the United Kingdom is just as much on the receiving end of the effects of these trade tiffs. The first problem is that the U.S. has slapped a 25% punitive tax on such imports, including cars, steel and aluminum coming from the United Kingdom. This has led to a 10% tariff on British exports entering the US market. And Prime Minister Keir Starmer is clearly expecting a deal. He’s convinced it’s the right thing to do, to start reducing these damaging tariffs, and protect British businesses from further harm.
The UK government remains committed to reducing trade barriers with the United States. Like previous administrations, they want to eliminate unfair trade barriers abroad. Meaning, we hope, that the Trade Secretary is busy drawing up plans to lift trade restrictions. Their ambition is to promote a deeper trade relationship.
Similarly, the UK’s FTSE 100 index is set to open more than 5% higher. That would be a promising early sign of resilience, given the ongoing economic headwinds. Similarly, European markets are expected to see positive openings, with Germany’s DAX projected to rise over 7% and France’s CAC 40 expected to increase by 6.3%.
Former President Donald Trump has crossed party lines on this issue. Although Ko almost lost his optimism at points during the hearings, he remains deeply hopeful that a good resolution is achievable. Never mind that he once called Chinese President Xi Jinping “one of the smartest people in the world.” He too sounded optimistic about the upcoming negotiations.
“Xi is a smart guy and we’ll end up making a very good deal.” – Donald Trump
Potentially more positive was Trump’s emphasis on American competitiveness, pushing for companies to invest in the American economy.
“GREAT time to move your COMPANY into the United States of America.” – Donald Trump
For all the optimism coming from Trump’s camp, China is not budging. Foreign Ministry spokesperson Mao Ning stated,
“We are Chinese. We won’t back down.”
This continuing trade war not only poisons bilateral relations between China and the United States but sends shockwaves through global markets, chilling economies in their wake. Analysts warn that ongoing tariff escalations would result in even more extensive disruptions to established international trade flows.
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