Markets Calming in Response to US, China Tariff Additions?


Though the wild winds of tumult roll, and trade war escalations strike fear into the American farmer, the New York Times is now noting that financial markets are apparently “stabilizing” and assumedly pricing in some of the risk and conflict around US /relations.

“The S&P 500 rose modestly at the start of trading in New York, after European benchmarks recorded similar gains. Asian markets fell slightly,” write unnamed New York Times writers this morning. “The American stock benchmark rebounded off its steepest loss since early January, a drop that reflected the realization that the trade war between the United States and China is not likely to end anytime soon.”

To put the past week’s activities in a nutshell, markets receded after a sudden American increase in tariffs on Chinese goods. The White House suggested the Chinese should not retaliate – but they did anyway. Chinese diplomats and others indicated to the press that they would not be bullied into excepting one-way tariff increases without some countermeasure.

Now, this morning after the bell, some of the bloodshed on index leaders appears to have ebbed as the S&P 500 and DJIA are both up from opening numbers (around 10:00am).

That’s likely to be cold comfort to investors as they look for additional reactions to the rapid ratcheting up of trade conflict.

With billions more dollars in tariffs now placed on both American and Chinese goods being exported from one country to the other, analysts suggest we will see other market consequences within a few weeks – that’s how long it takes for tariff realities to go into effect, according to economic estimates.

In other words, while markets may be “stabilizing” to the current reality, there are other realities to come, and they may not be so stable in the future.

Keep an eye out as we continue to chronicle the reactions to trade changes in real time – day by day as markets respond and investors and analysts look to an uncertain future.