The latest U.S.-China tariffs have been akin to a tennis match as it took less than 24 hours for China to volley the latest tariffs served up by U.S. President Donald Trump as Beijing announced it will impose $60 billion worth of tariffs on U.S. goods beginning on Sept. 24.
The benchmark 10-year yield went up to 3.04, reaching its highest level since May. In the meantime, the 30-year yield went up to 3.186, while short-term yields showed the 2-year ticking higher to 2.795 and the 5-year to 2.931 as of 12:45 p.m. ET.
Related: Tariffs – A Recent Concept Or As Old As America?
The new round of tariffs from China are said to affect a list of 5,207 products within a range of 5 to 10%. Both the U.S. and China have already slapped each other with tariffs worth $50 billion total. Despite China’s countermove, the major U.S. indexes were all in the green–the Dow was up over 150 points, the Nasdaq up over 70 points and the S&P 500 gained 18 points.
“The Chinese side has repeatedly emphasized that the only correct way to solve the trade dispute between China and the United States is through talk and consultation on the basis of equity, integrity and mutual respect,” spokesman Geng Shuang said in a news briefing. “But what the US side has done doesn’t show sincerity or goodwill.”
After the markets closed yesterday, the Trump administration announced it would be moving forward with imposing a 10% tariff on $200 billion worth of Chinese goods that includes a step-up increase to 25% by the end of the year. The administration moved forward with the tariffs despite both economic superpowers in the midst of scheduled trade talks to ease tariff tensions.
The announcement of yesterday’s tariffs came just as the Dow Jones Industrial Average fell almost 100 points and the Nasdaq Composite lost 1.43% as trade war fears crept back into the U.S. capital markets despite effectively parrying their effects in August and for most of September.
Tariffs have put the U.S. in a very strong bargaining position, with Billions of Dollars, and Jobs, flowing into our Country – and yet cost increases have thus far been almost unnoticeable. If countries will not make fair deals with us, they will be “Tariffed!”
— Donald J. Trump (@realDonaldTrump) September 17, 2018
The list of goods affected by the new round of U.S. 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. Both the U.S. and China are said to have scheduled talks to address the latest trade issues later this month, but it is uncertain whether these new round of tariffs have put those purported talks on hold or abandoned altogether.
“The principal objective of the tariffs is probably not to bring Beijing to the bargaining table,” Arthur Kroeber, a senior analyst at research firm Gavekal said in a note. “Rather, it is to force US multinational companies to pull back their investments in China, so that the interdependence of the two rival economies is reduced.”
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