Global markets plunged for a third consecutive day as US President Trump threatened additional tariffs on Chinese goods, escalating trade tensions between the two economic superpowers.
Financial markets across the globe experienced a third consecutive day of losses on Monday, with investors growing increasingly concerned about the potential impact of steep trade barriers on the world’s largest consumer market.
The US-China trade tensions refer to the ongoing disputes between the two nations over trade policies, tariffs, and intellectual property rights.
The tensions began in 2018 when the US imposed tariffs on Chinese goods worth $50 billion, citing unfair trade practices and theft of American intellectual property.
China retaliated with its own tariffs, leading to a cycle of escalating measures.
The tensions have had far-reaching consequences for global trade, businesses, and economies.
The S&P 500 closed lower after a volatile session in which it touched its lowest level in more than a year. The Nikkei 225 index, Japan‘s benchmark, rose 5% after opening, following a steep fall earlier in the day. This jump comes as investors worry about the potential consequences of trade tensions on global economic growth.
The European Union had offered ‘zero-for-zero‘ tariffs to the US weeks before Trump‘s tariff announcement, but the US president rejected the proposal, saying it was not going to happen. Instead, he emphasized the need for energy sales to the EU as a key focus, claiming that European nations were not buying enough US goods.
The US is set to impose additional 50% tariffs on Chinese goods if Beijing does not retract planned countermeasures, according to Trump. This move has intensified pressure on global markets, with China vowing to firmly safeguard its legitimate rights and interests.
China and the United States have a long-standing trade relationship, with significant economic ties between the two nations.
The US is one of China's largest trading partners, while China is the US' second-largest trading partner.
Bilateral trade reached $737 billion in 2020, making it a crucial aspect of both countries' economies.
However, trade tensions have risen in recent years due to concerns over intellectual property theft, market access, and currency manipulation.
The renewed sell-off in Asian markets was followed by a brief reversal amid hopes of a reprieve, only for Trump‘s threat to rekindle the volatility. The market chart shows the significant fluctuations experienced by global equities on Monday.
In a bilateral meeting with Israel, ‘Are they permanent or open to negotiations?’ Benjamin Netanyahu asked Trump if the tariffs were. He responded that they could both be true, suggesting that there may be some flexibility in the US position. However, he also reiterated his criticism of China, claiming it is a closed country charging high tariffs.
The situation looks set to remain volatile on the markets today, with investors eagerly awaiting further developments and reactions from global leaders.
