US-China trade war continues

Global financial markets took a negative blow from the US president Donald Trump’s decision to hike tariffs on good worth more than US$200 billion imported from China. The said tariff hike takes effect from Friday, May 10, 2019.

US customs and border protection are poised to impose a new 25 per cent duty on US-bound cargoes coming from China on Friday. Though, goods in the more than 5,700 affected product categories that left Chinese ports and airports before midnight will be subject to the original 10 per cent duty rate.

The tariff hike came on back of long going trade deal talks since the second half of 2018. Trump, earlier this week, made public of the proposed tariff hike with a reason of China being slow in deal talks. The increase went ahead even as American and Chinese negotiators began another round of talks in Washington aimed at ending a battle that has disrupted billions of dollars in trade and shaken global financial markets.

Global trade may take further hit as China hinted of retaliation. Trade war will keep markets on edge and also impact the price of commodities such as crude oil and base metals.

India, though, may get a little opportunity to expand its exports to the US for products such as textiles and garments. Broader markets in India will remain stressed with uncertainty over election results along with further developments on the trade war front.