Escalating trade fight weighs on global stocks, boosts Treasuries

26 June, 2018, 23:57 | Author: Frank Williams
  • Trump officials send mixed signals on China investment curbs,...

Chinese investment has provided jobs and tax income for the USA, and it should view commercial activities "objectively", Foreign Ministry spokesperson Geng Shuang told reporters in Beijing on Monday.

The fireworks in the stock market follow an escalation in the back-and-forth threats to global trade, which suggest that investors are becoming increasingly anxious that political rhetoric is moving toward actual policy.

"All we're doing here with the president's trade policy is trying to defend our technology when it may be threatened", Navarro said.

"The United States is insisting that all countries that have placed artificial Trade Barriers and Tariffs on goods going into their country, remove those Barriers & Tariffs or be met with more than Reciprocity by the U.S.A".

The U.S. Treasury is due to issue its recommendations on Chinese investment restrictions on Friday.

The Dow, a narrow gauge of 30 US stocks, has declined in nine of the past 10 trading days - a remarkably long losing streak that adds up to a 4.6 per cent decline. Amazon shares fell more than 3.5%, while shares of Google and Facebook fell 3.67% and 3.77%, respectively.

The disagreements were also about USA tariffs on $34 billion worth of Chinese goods that are scheduled to go into effect on July 6, which China said would trigger retaliation involving its imports of American soybeans and motor vehicles. The EU has long blamed China for flooding its markets with cheap steel, and has imposed its own steep tariffs on Beijing. Goods assembled and exported in one country often depend on components manufactured in another, after being designed in yet a third country, making the national trade deficit focused on by President Trump an unreliable guide.

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Bloomberg's report is titled "US plans curbs on Chinese investment, citing security risk" and cites eight people familiar with the plans.

"I would not, on the investment side, be betting against the Treasury Department", Scissors said, noting that Treasury would control implementation of such rules.

The bill would allow the Committee on Foreign Investment in the United States (CFIUS) to review transfers of minority interests in companies dealing with critical infrastructure or critical technology as opposed to full acquisitions.

The government official said the Treasury would invoke the International Emergency Economic Powers Act of 1977 (IEEPA) to devise the restrictions.

After his comments, stocks recovered some ground and the benchmark Dow Jones Industrial Average closed with a loss of 1.3 percent, or 325 points.

Hours later, White House trade and manufacturing adviser Peter Navarro walked back Mnuchin's remarks, telling CNBC that the restrictions on investing in tech companies would just target China.

Airbus could stand to benefit if China's looming trade war with the United States prompts Beijing to favour the European aerospace giant over U.S. rival Boeing.

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