Trade War Concerns Overshadow the G20 Summit

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Trade Wars Take Center Table

The meeting of global finance ministers at this weekend’s G20 summit was marked by a tone of concern regarding escalating trade disputes. Rising tensions between the US and China are headlining these disputes. Given the recent downturn in global data, leaders are concerned that the world economy is once again headed into a downward spiral. This comes following a fresh outbreak of tariffs between the US and China as well as US aggression with other economies over trade policy.

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US Trade Policy Becoming More Aggressive

Despite mounting global concern, the US is showing no signs of backing down over its trade policies. These have recently seen a 5% tariff launched on all Mexican goods entering the US. There have also been threats of tariffs on EU and Japanese autos which are due to start in under six months. Finally, removing India’s special status has also been mentioned. This would mean that India would no longer be exempt from US tariffs.

Speaking to reporters at the G20 meeting, the US trade secretary Steve Mnuchin said

“I don’t think in any way that the slowdowns you’re seeing in parts of the world are a result of trade tensions at the moment,”

G20 Leaders Highlight Risks

In the final draft of a statement released at the end of the weekend summit, global finance leaders concluded:

“Global growth appears to be stabilizing and is generally projected to pick up moderately later this year and into 2020… However, growth remains low and risks remain tilted to the downside. Most importantly, trade and geopolitical tensions have intensified. We will continue to address these risks, and stand ready to take further action.”

The US Backs Out Of Trade Clause

Worryingly, the final G20 statement was reported to have included a clause where leaders “recognize the pressing need to resolve trade tensions”. However, on the insistence of the US, this clause was removed. This is a telling sign for how they intend to proceed regarding trade policy, again showing no sign of backing down.

Trump and Xi Jinping To Meet

In the wake of escalating trade tensions, later this month, President Trump and Chinese premier Xi Jinping are scheduled to meet. After this point, Trump said he will decide on whether to apply a further round of tariffs.

Following the recent increase of tariffs on $200 billion of Chinese goods from 10% to 25%, Trump warned that he could also tariff the remaining $300 billion of Chinese goods entering the US. After that, China retaliated by raising tariffs on US goods and vowing to not back down. Now, global finance leaders are concerned that the trade war will continue to escalate.

The French finance minister told reporters:

“I think all the G20 people are aware that kind of situation would lead to an economic crisis, to a lack of growth and to a slowdown everywhere in the world.”

Technical Perspective


The GER30x is trading at an interesting level currently. Following the breakdown last month through the low of the rising channel from last year’s lows, GER30x has since recovered and as traded back up above the 12039.9 level. The break has also taken price back above the short term bearish channel from 2019 highs. This can be viewed as a bull flag and suggests there is further upside to come.

The recent warning from the ECB that it has discussed potential easing measures in the wake of fresh trade war tensions, is keeping equities supported. While above the 12039.9 level, focus is on a further run up to test the 12425.2 level next.

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