US trade war fears weigh on markets as South Korea sounds alarm – business live

All the day’s economic and financial news, as anxiety over escalating trade tensions between China and Washington worry investors

Stephen Roach, a senior fellow at Yale University, also thinks America will lose out if it keeps slapping tariffs on Chinese imports.

He told CNBC this morning that trade wars are not easy to win (something Donald Trump claimed earlier this year).

They’re easy to lose, and the U.S. is on track to lose this trade war.

“This is live ammunition. This is not just rhetorical discussion any more,.

The US is on track to lose its trade war against China, economist Stephen Roach says

Wayne McCurrie of South Africa’s First National Bank fears that global growth will be damaged if the US-China trade dispute keeps escalating.

USA trade numbers with China. USA imports around $500bn from China and China imports $188bn from USA. USA trade deficit then $322bn. Trump now talking about additional tariffs on $200bn. This will be meaningful and will shock global trade and could reduce growth in world by 0.5%

China so far has retaliated $ for $ on tariffs. Let’s hope again that level heads prevail. Stories are that according to trump logic: impose tariff on $200bn then China retaliates with $200 but then China has no more imports. Trump can still impose another $300 bn

One overlooked point on the prospective $200bn US tariffs is that they’re only proposed at 10%. Given renminbi has fallen over 5% against US dollar since April, the impact on Chinese exporters appears manageable.

Trump is serious about punishing China, he is picking up the areas where it would hurt the most. Although, market participants still aren’t factoring in a full trade war. The hope is that China and US would be able to resolve this matter through bilateral agreement. But uncertainty around this matter has anchored up. The sad aspect is none of the parties are ready to throw in the towel yet which makes me think that there is no resolution in insight yet. Beijing has threatened for retaliation action against the current measures.

Therefore, over the coming days, I would expect a tit-for-tat reaction from China-unless the bilateral discussions resume between the two parties. The alarming area is if China chooses to go after the multinational companies which are operating in China. Certainly, that is the area where it would create more wounds. We think that the odds are high that China would specifically pick on US firms or at least it would shift the grounds in such a way that other foreign firms would have more privileges being in China on relative perspective. After all, China isn’t going to sit on its hand and see its GDP dragging lower by another 0.2% if the new tariffs become effective.

The car industry is also worried by America’s belligerent stance on trade.

The labour union of South Korean manufacturer Hyundai warned that tens of thousands of US jobs could be lost if China and the US don’t step back from a trade war.

“If South Korean car exports to the U.S. get blocked and hurt sales, the U.S. factory in Alabama that went into operation in May 2005 could be the first one to be shut down, putting some 20,000 American workers at risk of layoffs.

The South Korean trade ministry is worried that demand for its ‘intermediary goods’ will be hurt, if America imposes tariffs on $200bn of Chinese goods.

These are products which are assembled to create a final product (for example, memory chips and hard drives used to build a computer).

As Chinese electronics, computers and communications equipment were included in the additional list of tariffs, Korean companies are worried their exports of intermediary goods used in those items could decrease if the tariffs are imposed.

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

City traders will be trudging wearily to their desks this morning after last night’s gripping World Cup drama, and worrying about the impact of a US-China trade war.

“We have detailed analysis (on which products will be affected by the U.S.-China trade war),”

“The impact will be mixed. There will be both positive and negative effects. Some Korean exports could replace Chinese goods to be slapped with tariffs, for example.

South Korea says U.S.-China trade war may hit exports of intermediary goods

Related: From eels to anvils: Trump’s new China tariffs revealed

European futures pointing to a positive open…

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Read the original at Economics | The Guardian.