Trade war comes at an unfortunate time for the economy

Information Technology, News

The intensification of the China-U.S. trade war has come at a chiefly unfortunate time for the world’s economy. So much so that it has threatened to convert a phase of sluggish development into recession.

In the previous week, U.S. President Donald Trump stated how he intends to inflict new tariffs on Chinese imports worth hundreds of billions of dollars. As a response, Beijing stopped its purchases of U.S. based farm products. This led to yuan, its currency, dropping to its lowest in 11 years. Trump deemed China as a currency manipulator soon after, something that means little at this point but might pave way for increased raise in tariffs in the future. China has made a point of avoiding this accusation by Donald Trump that it is making use of an undervalued currency to land an unfair advantage for its exporters, so it has been greatly intervening to avert a further devaluation of the yuan against the dollar.

An economist at the Loyola Marymount University in California, Sung Won Sohn, how this series of occurrences are enough to break confidence, faith, and expectations.

Stock markets around the world have responded predictably to this major boom in the economic cold war. On Monday, share prices fell and investors started looking for conventional assets to invest in, namely gold and the Swiss franc. Before it rebounded on Tuesday, the Dow Jones Industrial Average lost 767 points (2.9%). The company jumped back from the sharp fall on Wednesday and was short 68 points in trading that took place in the afternoon.

It appears that there is no possibility of reaching a trade deal at this point.

Sohn stated how she doesn’t believe the Chinese are expecting (or on a lookout for) a trade deal from the present President of the U.S.