Wall Street Selloff over Trade War Concerns Impacts on Asian Stocks

The trade conflict is really just one aspect of the increasing strategic competition between the United States and China.

President Donald Trump on Wednesday said the United States was “not in a trade war with China” because such a war had already been lost by past USA leaders. It all adds up to about $3 billion.

That’s in response to 1,300 Chinese products that might be subjected to 25 percent tariffs from the U.S. Here are some of the winners and losers. China wasted no time saying it would punch back with $50 billion in tariffs on 106 products it imports from America.

Here’s how things got to this point and where it could be headed.

Bernstein said in a note Wednesday that BMW sends 89,000 vehicles annually from the U.S.to China while Daimler AG’s Mercedes-Benz ships 65,000.

“You’re going to have a lot of sectors of the U.S. economy in places that have been fairly supportive of the president where they will all the sudden start to feel some pain – and that’s deliberate”, says Phil Levy, senior fellow at the Chicago Council on Global Affairs.

Meanwhile, the latest USA manufacturing activity data showed new orders for U.S. manufacturing companies in March 2018 were at their lowest since August 2017.

China will also impose levies on American whisky, cigars and tobacco, some types of beef, lubricants, and propane and other plastic products.

The president argues China doesn’t play fair on trade, which is why there’s such a large trade deficit in its favor between the two countries.

Activity in Japan’s service sector also grew at its slowest pace in 17 months last month, British shop prices dropped at the fastest pace for more than a year while Australian February building approvals fell 6.2 percent.

So far this year global stocks have only fallen 3 percent.

The US said it would put 25 percent duties on Chinese industrial, transportation and medical equipment and information technology. That will show up in everything from buildings to cars.

The proposed list covers approximately 1,300 products imported from China, including industries such as aerospace, information and communication technology, robotics, and machinery, the Office of U.S. Trade Representative (USTR) said in a statement.

Commerce Secretary Wilbur Ross is brushing off concern over trade war with China.

There are compelling economic reasons for the United States and China to avoid imposing extensive tariffs on bilateral trade, but both sides face tricky domestic political constraints.

Politicians in Washington, in other words, seem dead set on directly countering China’s “Made in China 2025” industrial policy, regardless of any short-term agreement on trade. “Investors believe a trade war will hurt both countries and their economies eventually”.

It’s a sign that negotiations are going poorly between the two sides, as they try to prevent escalations in trade tensions.