On Monday, President Donald Trump further escalated trade tensions by threatening to impose new tariffs on all Chinese imports. This step escalates an increasingly dangerous game of chicken that threatens to wreak havoc on the global economy. This announcement coincided with China, as staunchly intransigent as ever, announcing that it would double down on just this kind of intimidation. The Chinese government has counterattacked by trying to frame Trump as a schoolyard bully. This position is an incredible testimony to their resolve to hold strong against re-imposed economic pressure.
The potential for additional tariffs is the biggest fear of all. Trump’s administration beat him to it, as they imposed 10% tariffs on xi goods from China way back in February! China’s Commerce Ministry shot back in no uncertain terms, warning that any such new tariffs would draw immediate “countermeasures” aimed at American products. This endless back-and-forth maneuvering has kept fears of a full-scale trade war alive, and such a conflict could have disastrous consequences for economies around the globe.
In reaction to these advances, a group of Chinese state-owned firms quickly moved in to provide moral support to financial markets. So they acted as trade tensions kept ratcheting up. This promise from the state and these financial institutions is designed to help reduce market fluctuations and give investors confidence in a time of increasing uncertainty.
In an address given Tuesday, Lee, Hong Kong’s Chief Executive, slammed Trump for his provocations. He referred to the tariffs as a “retaliation imposition,” and he called the action of the Trump administration, “ruthless.” He warned that such measures “will disrupt the world economic and trade order, bringing great risks and uncertainties to the world.”
United Kingdom, which is currently negotiating a separate economic deal with Washington. Their objective is to gain tariff reductions even in the middle of a constantly changing trade battlefield. Those analysts say the economic picture during this critical period for the UK itself has become downright perilous thanks in large part to these mounting tensions.
Indonesian stock and currency markets reopened on Tuesday for the first full day since March 27. They sought to align themselves with world market trends as they moved in response to Trump’s tweets. Only Taiwan and Singapore’s markets reported losses, while South Korean and Australian markets reported strong gains across the board.
Alfredo Montufar-Helu, an economist with The Conference Board think tank warned against overlooking China’s determination on this front. He noted that it would be “a mistake to think that China will back off,” emphasizing that Beijing is unlikely to want to “appear weak” in this contentious environment.
Another sign of the growing perilous waters came in the unique and telltale explanation from BBC North America Correspondent Anthony Zurcher. He pointed out that Trump appears to be playing a dangerous game of chicken, the very next day before his “reciprocal” tariffs are slated to go into implementation. The fate of the world’s economy may very well rest as both countries play a dangerous game of chicken.
Earlier this week, the stock market prohibited short-selling. Trump’s tariff announcements have, understandably, thrown their world into chaos and they are readying themselves for the same. It’s a sign of the times. This precautionary measure reflects the increased volatility and uncertainty in global markets.
“We have many, many countries that are coming to negotiate deals with us, and there are going to be fair deals.” – Donald Trump