The global markets had one recurring nightmare – a trade war between the world’s two largest and most influential economies. We are talking about none other than the United States and China.
While much of the rhetoric which made headlines during the course of Trump’s Presidential campaign, such as the building of a wall along the Mexican border and a huge $500 billion infrastructure deal, never came to pass, the President has followed through on one threat; the trade wars.
The dramatic opening shots in this war were fired when President Donald Trump announced that he would be imposing tariffs on Chinese exports to the U.S. Beijing, very swift in its comeback, outlined plans to impose tariffs of its own.
This ever-growing antagonism led us to believe (and rightfully so) that this impending trade war, was only headed for further escalation. Did it come as a surprise to the markets? Perhaps, but the truth is it shouldn’t have. Trump’s stiff stance on trade has always been consistent. He campaigned on it, and we’re only getting what we were told we were going to get. That’s how POTUS Trump put it too, saying his actions were just a necessary part of negotiations with China.
We’re seeing the classic “it’s not personal just business” stance on Trump’s side. After all, he’s after a trade surplus and current trading practices have provided Chinese companies with meaningful advantages. Given these facts, China wasn’t going to just give in to President Trump’s demands without putting up a decent fight and so, one dramatic opening shot then became two in retaliation, sparking a tit-for-tat series of events which is still in full swing and only growing in intensity.
Although the economic impact of the current tariffs has been fairly limited, with neither side seeming willing to back down and each passing week bringing mentions of new measures, the market is fearful of how far this trade war will go. Take a look at our infographic below while we run you through the timeline of these events and look at how each side has reacted.