This week the collapsing state of US-China trade relations has roiled markets. Talks appeared to have broken down after US trade negotiator, Robert Lightizer, accused China of reneging on what little the two countries had already agreed on. The opening shots in a new trade war have already been fired, with President Trump confirming he’s increasing tariffs on $200bn worth of imports.
Hiking tariffs is a high risk move. In the short term the tariffs are paid by US consumers, who will face higher prices on imports, while in previous spats China has proved adept at targeting its retaliation at vulnerable groups of Trump voters such as mid-western soya bean farmers. With next year’s election campaign already beginning, the political fallout could be severe. One crucial detail is that the tariffs are not being applied to goods in transit. While this sounds like a minor technicality it means most goods with the new tariffs applied won’t arrive for a few weeks, meaning there is still time for a deal to be worked out.
Read what the team at FE consider to be significant over the current week.