May 14, 2019
Andrew Campbell
On May 10th, Sino-US trade negotiations broke down, which impacted commodity markets, lowering the prices of oil, soybean, and cotton. Gold prices hit their biggest one-day gains since February, and world stock markets were also mostly down overnight. China and the United States failed to reach a trade agreement. While the United States implements new tariffs, China retaliates. The world marketplace is in a very downbeat mood, causing the stock market and US dollar to go down. Trade representatives from China and the United States will continue negotiating, but investors worry that the Sino-US trade war may escalate further, impacting the global economy, crude oil demand and putting up gold prices.
The trade negotiations between the two superpowers-China and the United States-have reached a stalemate and the relationship has deteriorated. The US stock market fell sharply and caused the gold to rise again. On May 10, Trump raised the tariff on China's imports of 200 billion US dollars from 10% to 25%. This move led to retaliation from China. On May 13th, China announced that 5,140 products produced in the United States would be launched for a total of 60 billion US dollars, which increased tariffs by 25%, 20% and 10% respectively since on June 1. China stated that the United States imposed tariffs to raise Sino-US trade frictions. It violates the Sino-US consensus to resolve trade issues through consultations. It harms the benefits of both sides, and does not meet the expectations of the world, neither. In order to defend the multilateral trading system and its own rights and interests, China has to impose tariffs on some imported goods from the United States.
China's economic growth is slowing down, and the trade war with the United States is damaging its exports and the confidence of its businesses and consumers. Meanwhile, the trade war has caused panic in the US financial markets, jeopardizing its stock market that Trump sees as expressing confidence in his economic policies. China’s retaliatory tariffs have also plagued American farmers, who are important in Trump’s politics. Moody’s Analytics claims that the US economic growth rate (2.9% last year) may reduce by 1.8%, and China's growth rate will drop to around 5%. Therefore, both China and the United States intend to continue negotiating and leave room for each other. It is hoped that the two superpowers can reach a mutually beneficial and win-win agreement on the basis of mutual respect and benefit for the global economy.
Photo:Webshot.