Trade tensions continue to escalate between the two countries

Trade war

  • To raise import tariff rate on some US goods
  • New tariffs will range from 5% to 10%
  • New tariffs will go into effect on 1 September and 15 December
  • A total of 5,078 US products will be affected, notably autos
  • To resume 25% tariffs rate on US autos on 15 December
  • To impose extra 5% tariffs on soy beans from Sept 1
  • To impose 5% tariffs on US crude oil imports from Sept 1

This has just sapped out all the optimism in markets today as the risk mood gets tempered with. US 10-year yields have fallen back to 1.62% from around 1.65% earlier and US futures have now turned negative as well.

USD/JPY is brought to lows around 106.43 currently as a result.

These aren't the actions of a country that wants to negotiation in September, or a country that wants to make a deal. China is hunkering down for a fight and flexing its muscles. These aren't huge numbers overall but the risk is that they trigger a response from the White House.