Dollar hits 6-month high against yen as trade fears trumped

Aaron Brown
July 12, 2018

A possible second round of tariff hikes announced Tuesday by the US Trade Representative targets a US$200 billion list of Chinese goods.

Global markets are rattled this morning after America escalated the deepening trade war between the two countries.

More than 6,031 product lines are affected by the proposed tariffs, including seafood, fruits and vegetables, grains, tobacco, vehicle rearview mirrors and burglar alarms.

More than 6,000 items could be affected - including burglar alarms, vehicle tyres, handbags, baseball gloves, carpets, toilet paper, dog food, and hundreds of food products. Senate Finance Committee Chairman Orrin Hatch called it "reckless", adding that the tariffs were "not a targeted approach".

President Donald Trump has said he may ultimately impose tariffs on more than $500 billion worth of Chinese goods - roughly the total amount of United States imports from China a year ago.

President Trump published a list of Chinese goods he will give a tariff of 10 percent on, which are worth a total of £151 billion.

Lighthizer said the initial $50 billion in USA tariffs were aimed at goods that "benefit from China's industrial policy and forced technology transfer practices".

China's Commerce Ministry has said that Beijing has no choice but to fight back after the U.S. "launched the largest trade war in economic history", accusing Washington of violating the rules of the World Trade Organization (WTO).

As the trade war between the Unites States and China continues to escalate, Beijing has reportedly instructed its state run media to temper messaging on the issue.

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The tariffs, which wouldn't come into effect for at least two months, cover a variety of Chinese goods, including tuna, salmon and other fish, luggage, tires, dog leashes, handbags, baseball gloves, furniture, apparel and mattresses.

While disclosing a strategy of "splitting apart different domestic groups in USA", the notice explains: "The trade conflict is really a war against China's rise, to see who has the greater stamina".

A larger concern for the Trump administration could be the trade feud's impact on consumers.

Market drops started in Asia overnight, where all of China and Hong Kong's share indices lost more than 1%, and has spread to Europe as markets open here.

Faced with USTR's latest announcement, China was "shocked".

U.S. Trade Representative Robert Lighthizer on Tuesday evening unveiled a proposed list of more than 6,000 products to be hit with 10-per-cent import taxes.

In his statement, Lighthizer claimed that the United States has specially targeted those Chinese products that "benefit from China's industrial policy and forced technology transfer practices", and China's retaliation - from Washington's perspective - was "without any global legal basis or justification".

The rise in the interest rate helped push the loonie up earlier in the day, but it averaged 76.04 cents United States for a 0.15 of a USA cent drop on the day on trade tensions, said Del Greco.

However, the worst performing market was the Shanghai composite, which tumbled 1.8 per cent.

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