Markets are on high alert for any change in course, since this next step in the trade skirmishes opens the door for more escalation.
The stock market is waiting to see who might blink first in the week ahead — the White House or Beijing.
From all appearances, the U. S. is moving ahead to put tariffs on $34 billion in Chinese goods Friday, but in the stock market traders have been watching to see if the White House will extend the action or not. China plans to retaliate with tariffs of its own on U. S. goods and agriculture.
Markets are on high alert for any change in course, since this next step in the trade skirmishes opens the door for more escalation. If nobody blinks, or extends the deadline, the market could be volatile. The headlines will hit trading desks that are thinly staffed for the fourth of July week, and that could cause bigger market waves as a result of light volume.
“It’s a big deal in that do we get a concession before we reach that point, or do we have the tariff battle? This would really kick off the back and forth,” said Peter Boockvar, CIO at Bleakley Advisory Group. «That’s a wet blanket that at the same time could suppress growth and raise inflation.»
China is just one of the Trump administration’s multi-front trade skirmishes but it is the big one, and any developments with China that show a de-escalation would be taken as positive by markets. Canadian tariffs on U. S. goods, in response to U. S. tariffs on steel and aluminum, go into effect on Sunday.
As of Friday, there were no reports of any official talks with Beijing planned ahead of the July 6 deadline. White House and Congressional sources say they are operating as if U. S. tariffs on Chinese goods and retaliatory Chinese tariffs will be in place next Friday, and they are warning constituents and businesses to prepare for that. The initial $34 billion would be followed by tariffs on another $16 billion in Chinese goods, and there could be more after that.
Treasury Secretary Steven Mnuchin said Friday the U. S. is willing to listen if China wants to come to the table with free and fair trade, and treating U. S. companies fairly.
“Certainly, the number one mover in the market right now is our perception of trade issues, and it hasn’t been great.
