Asian markets crash after Trump initiates trade war with tariffs on China

Additionally, the memorandum said China "directs and facilitates" investment and acquisitions of United States companies for technology transfer purposes according to Beijing's plans, and lowers the ability of USA companies to license technology to Chinese firms at proper market rates. "Just use the word 'reciprocal, '" Trump said. That could include placing tariffs of their own on the $19.4 billion of agricultural products the USA ships to China each year, the majority of which is soybeans, according to reports.

The markets have taken fright because of the potential for a trade war damaging the global economic recovery.

"It's not that we thought trade wars would cause the market to fall, it's that there was too much optimism priced into stock markets", he said.

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Volume on USA exchanges was 8.11 billion shares, above the 7.3 billion average for the last 20 trading days. A few hours later, the government raised tariffs on USA pork, aluminum, and other goods. Specific actions won't be implemented for at least 45 days. This restrictive trade policy will not only undercut United States agricultural exports and economic growth, but will also cause undue harm to America's agricultural communities, which will likely bear the brunt of China's retaliatory measures. They have made enormous gains over the past year, but since they do so much business outside the United States, investors see them as particularly vulnerable to the effects of a trade dispute.

USA 10-year Treasury yields, which fell nearly 8 basis points on Thursday, rose on Friday but were still set for their biggest two-week fall since November.

If that trade is endangered, values for soybeans could collapse.

In the currency markets, the USA dollar plummeted to near one-month lows. Major U.S. companies such as Boeing, Apple and Ford could be hit if China retaliates, and the cost of Chinese imports - electronics, toys, clothing - could get more expensive for American consumers.

Amidst a general commodity selloff this week, gold shone through as a major victor, jumping to a one-month high. Only the interest-rate sensitive utilities and real estate sectors were higher after the Federal Reserve raised interest rates, as was widely expected, on Wednesday.

Safe-haven spot gold rose 1.3 percent to $1,342 an ounce, its highest since February 20. This is not a solicitation of any order to buy or sell any market.

Walt and Alex Breitinger are commodity futures brokers in Valparaiso.

  • Zachary Reyes