Global Financial Markets Impacted By US-China Trade War

The trade spat between the United States and China has escalated once again. The latest tit-for-tat between the two countries resumed when President Donald Trump announced that he would be implementing tariffs on $50 billion worth of Chinese trade goods. President Trump said that he had directed the US Trade Representative to identify goods that will fall under the new 25 percent tariff.

Beijing was never going to take the provocation lying down. China immediately responded by stating that they would also be implementing their own tariffs of the same value on several US goods.

This included quite a few agricultural products like sorghum and soybeans. The result is that American goods estimated to be around $34 billion of will be facing a 25 percent tariff from July 6.

CNBC-TV18

Earlier this week, President Trump continued to impose a 10 percent tariff on $200 billion worth of Chinese trade goods. Many economists and financial analysts fear that these measures from both parties will escalate the US-China trade war which will adversely affect global markets.

In a statement, China's Xinhua news agency, which is the official mouthpiece of the Chinese government, said

Following the path of expanding and opening up is China's best response to the trade dispute between China and the United States and is also the responsibility that major countries should have to the world. The wise man builds bridges, the fool builds walls.

Global Markets Feel Impact Of Trade War

The response from the US and China on the escalating trade war is already causing a negative impact on the world economy. Global stocks are taking a hit as traders all over the world are going into their metaphorical storm shelters to weather out the violent changes that the trade war will bring. This means dumping of stocks from a variety of markets.

Emerging markets were the hardest hit as many traders decided to reduce their risks and dumped their shares on the market for liquid cash. This move was also reflected in the currency market as many traders decided to exchange their current assets into dollars, which has momentarily pushed up the dollar's value to a high of 96.91 on the US Dollar Index.

US and European stocks also suffered, though they were not as hard hit as their emerging market counterparts. US stocks linked to the Dow Jones faced a 204 point decline if they were and those linked to S&P were hit with an 18 point slide. Many experts say that once the tariffs are fully implemented, we may see worse effects in the future.

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