Trade War with China

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Jura The idiot

Jura The idiot

General
oops,
Dow falls 600 points as Wall Street gets tariff whiplash
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US stock market losses accelerated on Tuesday, as financial markets continue to grapple with the risk of an all-out trade war between China and the United States.

Around 2 pm ET, the Dow (
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), S&P 500 (
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) and Nasdaq (
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) were all
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, adding to their losses from earlier in the day and yesterday.
The Dow fell more than 600 points, sinking below 26,000 points for the first time since March 29. The S&P 500 was down 2.1% and the Nasdaq fell 2.5%.
If the Dow finishes the day at this level, it will be the
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of the year. The worst day of 2019 was January 3, when the Dow fell 660 points.
European stocks fared poorly too. The FTSE 100 (
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), DAX (
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) and CAC 40 (
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) all closed 1.6% lower. The pan-European Stoxx 600 (
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) fell 1.4%.
Asian markets ended their day mixed, with the Shanghai Composite (
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) closing 0.7% higher, retracing some of its 5.6% drop on Monday, according to Refinitiv.
Why stocks are falling
Global stocks were ailing after President Donald Trump Sunday
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on Chinese imports that could come into effect on Friday, throwing global markets into disarray. His administration
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on that threat Monday evening.
"The initial optimism that Trump's truculence was bluster was tempered," said Michael Hewson, chief market analyst at CMC.
Investors previously expected Beijing and Washington to be close to sorting out a trade deal after months of negotiations. A lack of an agreement between the world's two largest economies could stymie global growth.
Technology and industrial companies have been hit the hardest by the selloff, because their businesses inherently rely on the global trade of materials and finished goods.
The United States has other trade-related issues on its plate: Trump has previously threatened tariffs on European car makers, which could prove difficult for the industry, and the USMCA agreement to replace NAFTA has not yet been ratified either.
In short, uncertainty is back.
A reversal of the recent trend
Over the past months, the "Goldilocks" investing environment of low inflation and high growth had calmed investors' nerves. But political risk came back with a vengeance after the US-China trade negotiations seem to be on thinner ice than previously thought possible this late in the talks.
Monday's selloff started with the Dow opening sharply lower, but stocks recovered most of their
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yesterday as trading went on. Investors took some comfort after Chinese Vice Premier Liu said he remains scheduled to travel to the US this week.
Many have weighed whether the presidential tweet was just a negotiation tactic. Analysts at Bank of America believe that both parties at the table remain motivated to agree a deal.
Speaking to reporters on Monday, US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin said
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over the weekend, undermining progress towards a detailed trade agreement between the world's two largest economies.
Lighthizer, the top US trade negotiator, said the administration would increase penalties on $200 billion of Chinese goods to 25% from 10% on Friday. Trump renewed his threat to raise tariffs on Sunday.
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SpicySichuan

Senior Member
Registered Member
Biscuits said:
But generally it will only affect that person who is in charge of deciding that thing you know? If they’re incompetent, the rest of the administration will fire them or refuse to renew their position.
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But the problem in China is could you really fire a well-connected, but incompetent, SOE CEO?
 
B

Biscuits

Major
Registered Member
Josh Luo said:
But the problem in China is could you really fire a well-connected, but incompetent, SOE CEO?
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That would be a problem for the company. But it’s very unusual for a third rate CEO to appear in a first rate company, if so, how did the company become first rate to begin with?

Companies with bad management stay bad and in the long term get weeded out. That’s not to say failed companies don’t exist, one can even say successful ones are built on mountains of failed ones.
 
N

Nutrient

Junior Member
Registered Member
Josh Luo said:
But the problem in China is could you really fire a well-connected, but incompetent, SOE CEO?
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Two years ago, Wang Tianpu, the former CEO of Sinopec,
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. Sinopec is a state-owned enterprise (SOE), the largest company in China. Wang was about as well-connected as anyone, but he is still in jail.

First you question the legitimacy of China's government, and now you imply that powerful Chinese CEOs are not accountable. Do you have any more propaganda from the U.S. (or Taiwan)?
 
Hendrik_2000

Hendrik_2000

Lieutenant General
Josh Luo said:
Maybe this is the reason why there are so many zombie SOEs in China?
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You cannot run economy based on efficiency alone. It will end up like western economy where company can be merge and bought then firing hundred of employee because it will lead to better efficiency Or the idea of outsourcing the productive manufacturing to outsider because the wages are lower therefore higher margin like Apple

A balance has to be strike between efficiency and common good . It is true that SOE has not been very efficient But it it preserve employment and strategic asset of the country eg the whole defense industry in China are SOE

But China also had hard charging private industry that is as efficient as any one The trick is to cultivate and promote the private industry and allow them to share more of the pie
 
Gatekeeper

Gatekeeper

Brigadier
Registered Member
Max Demian said:
Don't get me wrong. I do expect that the US importers (or consumers) are indeed paying the larger share of the burden. However, I would be surprised if Chinese companies aren't footing part of the bill. Why cannot the importers ask the suppliers to cut their costs? Or the target country's currency depreciates to offset some of the cost?

At some point, importing product A from country B becomes unprofitable and you start making plans to import product A from country C.
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Yes, they might be "footing the bill" in the form of reduced profits, unemployment. Etc. BUT THEY ARE DEFINATELY NOT PAYING THE TARIFFS! The tariffs can ONLY be paid by the US consumer to the US TAX authority. Period
 
Gatekeeper

Gatekeeper

Brigadier
Registered Member
solarz said:
They can, and that's the purpose of tariffs, but that still doesn't mean China is paying for those tariffs.

Just as the US can switch suppliers, China can also switch buyers. I suspect it's equally difficult for either to do so, so both are on equal footing here.

In the end though, it's still the Americans who are paying for the tariffs.

Like someone had previously pointed out, tariffs are just a form of taxation. You cannot levy taxes on another country. What Trump is basically saying is that raising taxes has improved the economy, which, all else aside, should have made Republican heads explode.
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Yeah, don't you just love this. Increase in TAXATION from a party PROMISED to reduce taxation!
 
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