China stocks, currency and metals tumble after US fires up trade war with tariffs on US$200b worth of goods
Tariffs already implemented and those potentially in the pipeline will amount to half of total imports from China last year
Asset classes ranging from mainland and Hong Kong stocks to the yuan and commodities were on Wednesday hit by an escalation in the trade war between the United States and China, after US President Donald Trump threatened to impose tariffs on another US$200 billion worth of Chinese imports.
The benchmark Shanghai Composite Index dropped by 1.8 per cent to halt a three-day rally, while Hong Kong’s Hang Seng Index sank by 1.3 per cent. The offshore yuan fell close to an 11-month low while zinc futures led the decline among base metals on the mainland.
After imposing tariffs on US$34 billion worth of Chinese imports on Friday, the White House said on Wednesday it was seeking public consultation on duties on an additional US$200 billion worth of items, ranging from hundreds of food products to consumer electronics and television components.
The proposed 10 per cent levy may go into effect as early as by the end of next month, with the consultation ending on August 30. The tariffs already implemented and those potentially in the pipeline will amount to half of the total imports from China to the US last year. These were worth US$433.2 billion.
“The US-China trade dispute is something investors need to be paying attention to, as it is far from over, and the impact will be global,” said Hannah Anderson, global market strategist at JPMorgan Asset Management. “It will take markets sometime to fully price in the impact.”
The Shanghai Composite Index retreated by 49.86 points to 2,777.77, ending a three-day rebound of 3.4 per cent. The Hang Seng Index lost 370.56 points to 28,311.69, and the Hang Seng China Enterprises Index, or the H-share gauge, dropped by 1.5 per cent.
