The new round of U.S. tariffs on 10% of Chinese goods signals that the U.S. won’t relent on the application of pressure to force China’s hand in making a deal when actual negotiations materialize. Purportedly, the goals of the lower 10% figure is apparently two-fold–to swing voters towards Republicans when mid-term elections begin and to lessen the blow for shoppers as holiday shopping is set to start this fall.
The list of goods affected by the new round of tariffs was apparently modified by the White House, which removed about 300 goods from an initial list that included smart watches, certain chemicals, bicycle helmets, high chairs, and other goods. Despite this, the latest actions could no doubt ramp up trade tensions, which could negatively affect the U.S. markets, but thus far, that hasn’t been the case as the Dow was up almost 200 points in today’s trading session.
“Going forward, the dollar and trade war may become separate influences as the inverse correlation between the dollar and commodities/trade sentiment is breaking down so far this week,” said Tyler Richey, co-editor of the Sevens Report. “That will likely lead to less correlation between precious metals and industrial metals.”
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