Customs policy in focus: stock markets volatile – was the euphoria premature?

• USA and China with agreement in the customs conflict
• Investors initially relieved
• Some risks remain

Agree between the USA and China – Trump – EU threatens EU with new tariffs

After the latest escalation in the customs dispute between the USA and China, in which the USA occupied China with tariffs of 145 percent and Beijing with counter-tariffs in the amount of 125 percent, both sides recently agreed on a 90-day de-escalation phase. The US tariffs to Chinese imports drop to 30 percent, while China’s tariffs against imports from the United States go back to 10 percent. This caused relief at the stock markets.

Since then, however, there has been another up and down at the stock market: last Friday, US President Donald Trump threatened to import imports from the EU with new tariffs from the beginning of June. “I am not looking for a deal,” quoted DPA-AFX Trump, who founded the drastic step with stuck negotiations. Trump’s customs threats let the stock markets break in before the weekend.

After a conversation with EU Commission President Ursula von der Leyen, Trump announced that the introduction of the new tariffs he announced should be postponed by a good month. The additional tariffs of 50 percent would be postponed to July 9th. Trump wrote on his online platform Truth that the Leyen promised him that necessary discussions would start quickly. Investors on the stock markets in Europe reacted relieved on Monday – there was no reaction from the US stock markets directly on Monday, as they remained closed due to the memorial day.

Euphoria premature?

However, there are still risks on the market. As CNBC reports, despite his agreement with the United States, China still holds rare earth from export to the United States. These are crucial for important branches of industry such as defense and energy.

While Washington and India recently discussed their trade relationships, US President Donald Trump also said that he did not want Apple boss Tim Cook to build factories in India. While the government has been demanding for some time, Apple should also build the iPhone in the United States, Trump’s customs announcements ensured that Apple converted the delivery routes for the US market. The company is currently planning most of the iPhones sold in the USA from India.

Meanwhile, Fed boss Jerome Powell recently warned at the US Federal Reserve conference that the long-term interest rates will probably be higher, since “inflation could be more volatile in the future” because “more frequent and possibly more persistent shocks” could occur in the economy.

The euphoria due to the trade agreement between the USA and China may have been somewhat premature. As Marketwatch reports, experts warn of continuing risks, such as high ratings, a weak consumption, a fragile labor market and increasing bonding.

Editor finance.net