The decline on Friday would have been worse but some market participants are holding onto the hope that the new tariffs are not applied to Chinese exports that are already in transit before the deadline, so that provides some additional time for the two sides to reach an agreement.
“A ‘grace period’ was included on these tariff increases, so that goods currently in transit to the U.S. from China aren’t subject to the new 25% tariffs, just the old 10% tariff,” Tom Essaye, founder of Sevens Report, said in a note on Friday.
“That grace period was not included in previous rounds of tariffs and is likely an olive branch of sorts to the Chinese side. Given shipping times, goods sent from China today will take two weeks or so to reach the U.S., so if a trade deal is stuck in that time frame, the pain of the 25% tariffs will never be felt,” he added.
Liu He was meeting with Trump’s trade team without the title “special envoy” for President Xi Jinping, a role he has held in previous talks, suggesting he may have diminished authority to make concessions that could be key to striking a deal. Trump said Thursday tariffs are an “excellent” alternative to a trade deal with China.
Yet some believe the trade battle is poised to drag on longer.
“We continue to expect the two sides to reach a trade deal eventually, but this is unlikely to happen in the short term as the war is not painful enough for either side,” Zhiwei Zhang, Deutsche Bank’s chief Asia economist said in a note on Friday. “China is not likely to give in quickly. The damage to China’s economic growth is around -0.2% on an annualized basis, which is manageable.”
The Cboe Volatility Index, a measure of the 30-day implied volatility of the S&P 500 that’s commonly known as Wall Street’s “fear gauge,” hit its highest level since Jan. 4 on Thursday.
Trump started this week’s market turmoil with two tweets Sunday evening, threatening to hike tariffs on more Chinese exports as Beijing tried to renegotiate.
— CNBC’s Eustance Huang and Kate Rooney contributed to this report.
09 05 2019 0183 32 Our videos are made by the latest news in the world. Do you enjoy the video? Find it helpful? Want to view more? Why not subscribe our channel to save you .Shares on Wall Street were poised for losses at Friday's stateside open, as U.S. tariffs on Chinese goods were increased shortly after the stroke of midnight ET..14 05 2019 0183 32 shoes and more if tariffs kick in. Trump targets $300 billion of Chinese goods for new tariffs Analysts expect a volatile stock market as the .MARKET SNAPSHOT U.S. Stock Futures Extend Fall As Higher Tariffs On China Goods Kick In, Read most current stock market news, Get stock, fund, etf analyst reports .10 05 2019 0183 32 UPDATE U.S. stock futures extend fall as higher tariffs on China goods kick in,Read most current stock market news, Get stock, fund, etf analyst reports .
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