Whatever hopes existed for a breakthrough on trade between the U.S. and China were dashed over the week as both sides seemed to harden their positions. President Donald Trump doubled-down on his claim that Beijing broke the deal, while Chinese state media blamed him for the impasse and emphasised the Asian nation’s economic resilience. Outlook for a speedy solution to the standoff is disappearing. U.S. officials announced 25% additional tariff on all remaining imports from China l, while the Asian nation’s response is still awaited.
Trump has deployed import taxes on a scale not seen in decades, with some economists reaching as far back as the 19th century for comparisons. He has also threatened more to come with a May 18 deadline looming for him to decide on whether to proceed with new tariffs on imported cars and parts.
In tweets and other public utterances in recent days Trump has repeatedly hailed his tariffs, claiming they have helped power U.S. economic growth and repeated over and over again that other countries such as China pay the bill, a view even his own economic advisers are uncomfortable defending
On the back of these uncertainties we have seen the global stock markets fall and bond yields around the globe falling even further with most of Europe showing negative interest rates again. As you can see below the Australian government bonds out to 7 years are all below the cash rate.
Here in Australia we followed this trend with the A$ taking a big hit and falling well below the physiological barrier of $0.70 which should help to lift inflation and make our exports even more attractive with the big commodity producers rewarding shareholders with bigger and bigger dividend checks.