Equities. The trade war is accelerating

Trade war
Date: 6 June, 2019 - Blog

China counterattacks

It has just published an official document accusing the United States of being responsible for the end of the trade negotiations. It threatens to create a blacklist of US companies that could endanger its national security. It threatens not to sell rare earth to companies that go against its interests. It has just targeted FedEx, which has not fulfilled its obligations towards Chinese customers.

In a tweet, Donald Trump threatened Mexico with tariff increases if it could not stop the flow of immigrants to the US border. This has created a bipartisan outcry, as well as within its Administration – Mnuchin and Lighthizer in the lead, and among US companies, especially in the automotive sector.

Donald Trump has opened a new breach in his trade war by criticizing India for closing its market to American companies. He would like to terminate the preferential treatment granted to India, as to Turkey, coming from the Generalized System of Preferences; established in 1976, this preference system has enabled some developing countries to facilitate trade with developed countries without negotiation or reciprocity. Donald Trump announced a close agreement with Japan. But the latter calmed the ardor of the American president by noting that an agreement would take time.

Discussions between the United States and Europe are ongoing. But it is likely that the oldest trade dispute over Boeing and Airbus subsidies is festering. The risk of a severe economic slowdown, even recession, grows.