By CCN: Donald Trump’s trade war with China is on a knife-edge as Chinese Vice Premier Liu He flies to Washington today. The two-day talks were expected to lead to a final deal, but we might get an all-out trade war instead as Trump claims China “broke the deal.”
Investors are nervous. Analysts estimate the Dow and other US indices could fall 10 – 15 percent if the trade deal bombs. Goldman Sachs dived deeper, seeking out a list of Dow stocks that will be hit hardest, including bellwether names like Coca-Cola, Boeing, and Intel.
President Trump on China: “By the way, you see the tariffs we’re doing? Because they broke the deal! So they’re flying in, the vice premier tomorrow is flying, good man, but they broke the deal. They can’t do that. So, they’ll be paying.” pic.twitter.com/8uhKZHOeWE
— The Hill (@thehill) May 9, 2019
Trump: China “broke the deal”
Hopes for a trade deal were dashed this week as Trump threw out fresh threats to China. The president warned he would increase tariffs from 10 to 25 percent on $200 billion worth of Chinese goods.
It was a shock move as investors expected a trade deal to be inked this week. That move alone wiped out $1.36 trillion from global stock markets as China kicked back with a threat of retaliatory penalties.
On the eve of Liu He’s visit to Washington, Trump stoked fears yet further. In front of a crowd in Florida last night, he said Liu He was a “good man,” but “they broke the deal.” US Trade Representative Robert Lighthizer is now calling members of Congress warning them to prepare for a no deal situation.
In other words, investors need to be wary of a worst-case scenario.
For 10 months, China has been paying Tariffs to the USA of 25% on 50 Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods. These payments are partially responsible for our great economic results. The 10% will go up to 25% on Friday. 325 Billions Dollars….
— Donald J. Trump (@realDonaldTrump) May 5, 2019