U.S. Trade Representative Robert Lighthizer said Monday that the Trump administration will increase tariffs on $200 billion in Chinese goods early Friday. The prospect of higher tariffs had been first raised on Sunday by President Donald Trump, rattling investors who had anticipated that better progress toward a near-term resolution between the two superpowers.
In a briefing, Treasury Secretary Steven Mnuchin, along with Lighthizer, told reporters that the U.S. administration was made aware over the weekend that China was trying to back away from “some of the language” that had been hammered out in prior talks.
U.S. officials said that tariffs on those Chinese goods will rise from 10% to 20% at 12:01 a.m. Eastern time Friday, and markets will likely be monitoring China for further reaction.
The Wall Street Journal reported early Tuesday that China’s Commerce Ministry said on Tuesday that Vice Premier Liu He will visit Washington to continue trade talks on Thursday and Friday.
Chinese investors appeared to take the latest developments in stride, while buyers in so-called haven securities nudged the value of assets perceived as safe slightly lower.
Despite the trade worries, markets managed a powerful rebound on Monday, clawing back from steep declines early in the session in apparent response to Trump’s tweets about increase China import levies.
What stocks are in focus?
Shares of Allergan Plc. AGN, -0.51% edged 0.2% lower in premarket trade, even after the pharmaceutical company reported first-quarter earnings that surpassed Wall Street expectations.
Aramark ARMK, +0.42% stock tumbled 8.1% before the bell Tuesday, after the facilities-management company reported first-quarter profits and sales that fell short of analyst expectations.
What are analysts saying?
“The overriding concern here is that Trump has single-handedly halted the recent recovery in risk appetite by potentially derailing trade talks,” said Jasper Lawler, head of research at London Capital Group, in a note to traders.
Lawler said traders were “placated” by news that Chinese delegates would still arrive in Washington this week for talks, but skeptical the two sides can work out the latest fracture by the Friday deadline. “This means markets probably need to see the Friday deadline for raising U.S. tariffs on Chinese goods pushed back to avoid another selloff,” he said.
What’s on the economic calendar?
Investors will get on the number of job openings, along with the rate at which Americans are leaving their jobs in March, at 10 a.m. Eastern Time. At 11:30 a.m., Randal Quarles, Vice Chairman of the Federal Reserve Board of Governors will give a speech. At 3 p.m., the Fed will release its estimate of consumer credit growth.
How are other markets trading?
In Asia, the Shanghai Composite Index SHCOMP, +0.69% reversed a small lose to close up 0.6%, while the Nikkei 225 NIK, -1.51% back from an extended holiday break, fell 1.5%. European stocks SXXP, -0.60% were mostly lower, with the FTSE 100 index UKX, -0.98% down 0.6% as investors returned from a holiday and played catch up to Monday’s losses on the continent.
Gold GCM9, -0.19% was down slightly, while the U.S. Dollar Index DXY, +0.09% was flat, and crude oil CLM9, -1.03% dropped.