The trade war has ended without a deal and is causing much pain to the global economy.
After President Trump announced that he would hike tariffs on the $200 billion Chinese goods on Friday, it brought a retaliatory effect from China. China has announced on Monday that tariffs would be raised on American goods worth $60 billion from June 1.
The global economy will be damaged and growth in corporate profits will be on a steady decline. The stock markets plunged on Monday, with escalating fear on the tariffs made.
About 5,000 products will be affected by the Chinese tariffs. Most affected will be fruits, vegetables, beef, furniture, electric saws, and coal.
The American farmer is the worst hit. The earlier tariffs had already hit him hard, and now it will be an additional blow. Soybean farmers who are already on the brink of bankruptcy may see a further decline in their finances.
Frozen vegetables and fruits and animal products will be hit by the 25 percent tariffs. Chemicals will have 20 percent taxation.
Exports from the U.S. to China have fallen by 7 percent, last year. Similarly, China’s investment in the United States has dropped 60 percent in 2018, according to reports from the U.S. and China Business Council.
After the tweet by President Trump on May 5, the S&P 500 companies have lost almost $1.1 trillion. Once again, after the retaliatory tariffs by China on American goods, the S&P 500 lost almost 2 percent.
Investors are left in the lurch after expecting the trade deal to conclude peacefully. President Trump continues to put the blame on China for the breakdown in the deal.
Analysts are now expecting a big correction in the market. How far the correction will be is the question.
The 10-year yield has now fallen to 2.39 percent, and investors seek the safety of Treasuries and gold for investment.