Global stock markets have fallen, currencies have fallen and safe haven assets have been in demand this week after the increasingly worrying talk on trade issues ahead of the US and China negotiations starting tomorrow.
Over the weekend President Donald Trump lit the fire when he sent out tweets saying that he would be increasing tariffs on China this Friday from 10-25%, a threat that it seems like he will follow through with. During the week he doubled down on those threats prompting worries that China would not be sending a delegation to Washington this week for negotiations and even yesterday at a rally he was quoted as saying China had “broke the deal”. However China have decided to send a delegation to the states this week but have warned that any increase in tariffs will be met with retaliation. So it remains to be seen if and how China will retaliate but one thing can be certain, there are global worries and implications if the trade war were to escalate.
Right now it seems as though there are not many positives for markets to grasp onto in regards to trade, the only hope is that the talks tomorrow and Saturday can help to rebuild some bridges and restart negotiations for the tone to brighten. As of now markets aren’t pricing in a collapse in trade talks, only an increase in tariffs. A breakdown in talks would mean far bigger losses in the market.