Metals and mining stocks
Yesterday, President Donald Trump imposed 10% tariffs on $200 billion worth of goods from China. The tariffs will be increased to 25% by the end of 2018. However, the tariffs were a toned-down version of what the markets had been anticipating.
China has also imposed tariffs on some US goods. According to Reuters, “Beijing will impose levies on a total of 5,207 U.S. products—ranging from liquefied natural gas to certain types of aircraft as well as cocoa powder and frozen vegetables—at 5 and 10 percent, instead of previously proposed rates of 5, 10, 20 and 25 percent, the finance ministry said.”
Simply put, Trump’s tariffs and China’s retaliation were lower than what markets were bracing for. Speaking of metals and mining stocks, they have been beaten down this year amid the trade war scare, with markets pricing in a near-worst-case scenario. Base metals prices have plunged this year on concerns about Chinese metal demand. A stronger US dollar has also added to commodities’ woes.
Meanwhile, trade war fears could continue to haunt the markets in the near term. Read Trade War Could Trigger the Next Recession to see how a full-blown trade war could affect the markets.
You can also read Trade War Gets Ugly as President Trump Ups the Ante for more updates on the US-China trade war.