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Stock futures face backlash of Trump’s threat to hike tariffs on China.

2019-06-16 05:20:50 Business


On Sunday we saw stock futures take a sharp downward turn, a prime indicator for a lower open on Wall Street. This has all come to pass after President Donald Trump announced an increase on tariffs on Chinese goods being imported. This has also escalated the ongoing trade tensions between arguably the world’s two largest economies, and has undermined expectations for an agreement between the two nations. On Twitter the United States President said that progress in bilateral talks was insufficient, and it will lead him to hike duties on Chinese goods as soon as Friday. The tariffs that are to be put into effect were originally reserved pending the outcome of trade talks.
With pre-market trading opening on Sunday evening, Dow Jones futures saw a heavy decline of over 400 points, before paring some of those losses, in the S&P500 future index we also saw a major move into the red zone.
Donald trump a self-proclaimed tariff man, believes that the trade imbalance between the two nations can be reduced significantly with the use of import duties. The president said in a statement that growth in recent times has been effected majorly by the imposition of Chinese tariffs.
With these early warning signs for the markets, we can expect to see the S&P, the NASDAQ, and the DOW facing a rough start to trading when the opening bell sounds, this despite last week’s fantastic employment data. If Sunday’s preliminary decline carries on into Mondays trading, it could potentially threaten a rally that has been carrying the index’s new record highs.
Trumps tightening of trade taxes, could potentially be an extremely positive sentiment for those investors who hold a majority of equities, as with a pullback in the markets, it would mean less risks.
This week both nations are scheduled to meet, in what was set to be the final round of talks before reaching an agreement on tariffs. Over the majority of 2018 the US imposed 25% tariffs on over $50 Billion USD worth of Chinese technological imports, and 10% tariffs on other goods. If the US president does follow through with his word, then the current 10% tax that has been on hold so far will jump up to 25%, this may cause an equal retaliation from china. Trumps recent plan to impose more tariffs, have thrown thoughts that the two nations were close to a deal into the air, leaving investors and analysts wondering what this week’s talks will bring.
Rachel Green – Walter International

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