Markets Rise as US Postpones Tariff Increases on China

The US Government has postponed tariff increases on China as Donald Trump continues trade talks with Xi Jinping, the Chinese President.

Originally, increases in tariffs were set to come into force on 1^st March 2019 from 10% to 25% but Trump has decided to delay as both the US and China are making good progress to try and repair this damaging trade war.

The trade war saw the US apply tariffs on Chinese goods of $250 billion pa, then China returned the favour and amounting to $110 billion pa on US products. 

Donald Trump proposed further tariffs amounting to $267 billion on more Chinese products that would mean virtually all Chinese exports to the US would suffer.  This is what has been postponed with China allegedly aggreging to import more US goods and services although trademarks, copyright and intellectual property rights are still a major concern.

This trade dispute is a drag on financial markets with fears rising on the future of the global economy.  

Comment

We expect progress to be made as pressure mounts on the World’s two leading economies to avoid a global economic slowdown.  China’s stock markets reacted positively with nearly a 6% increase today.  Expect more games from both sides.  The US imports far more Chinese goods than it exports to China so tariffs will hurt China more but Donald Trump will not want to drag the US into recession with his re-election year coming in 2020, so compromise will be on the table at some point.