Home » Currency Note » Currency Note » China retaliates with $60 billion tariffs

If there was ever a day that was, then that was the day that was. Overnight, Donald Trump announced a new 10% tariff on $200 billion of Chinese goods that would rise to 25% at the end of the year. The President’s move against what he perceives as unfair trade policies could yet prove counterproductive, but that remains to be seen. What is known is that China has already retaliated, with tariffs on $60 billion of imports from the US.

Despite the fact that China’s retaliation could easily have been worse (they promised to be more severe last month), it still served to increase fears of a global trade war. There is the very real possibility that countries around the world will be caught in the crossfire, and the US and China could become embroiled in a deeper dispute. Neither country appears prepared to blink first – and you do have to wonder how this will all end.

Issues surrounding Brexit also popped their head above the parapet once more, with a rightwing thinktank unveiling a radical plan for a UK-US Brexit trade deal. It would mean that the NHS would be open to foreign competition, which may or may not be related to the £350 million per week the bus promised. Meanwhile, BMW plans to shut its Mini plant for a month after the UK’s departure from the European Union, while Jaguar Land Rover has announced 2,000 staff will go to a three-day week as a result of Brexit and a slump in the sales of diesel-powered cars.

With no major economic data releases on the schedule, it wasn’t all that surprising that currency movements between sterling, the euro and dollar were fairly sedate. Today is much busier though, with the UK inflation rate for August on the schedule, as well as July’s construction output for July. As always, none of us can truly predict what will happen – especially with escalating trade wars. The best thing to do is to focus on protecting you budget, rather than guessing the future. Speak to your Personal Trader on 020 7898 0541 to find out about how they can help you lock in the exchange rate with a forward contract.

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