“China’s part in global manufacturing is now larger than the joint part of the US, Japan, Germany and South Korea.”
Efforts by the US to block China’s efforts to avoid tariffs can stress global supply chains. Waning supply from China may be higher in prices as other economies take time to fill the difference.
Nick Timiros, Chief Economics Correspondent in Wall Street Journal, Comment,
“A question (assuming that it sticks) to the extent to which 125% tariff is made on China which is not paid because orders are drawn.”
Timiros cited an example from Guangdong, where the toy manufacturer Chen Kingsin canceled the immediate order from the US customer after Tariff Hike.
Chen allegedly said:
“It is a deal breaker. For both sides, there is no place to trade.”
Rally despite the increase in markets
In response to Trump’s 90-day tariff stagnation, global markets ralled, as investors separated 125% tariffs on China.
Notable benefits include:
- The Hang Seng index increased 3.69% to 21,011 on Thursday morning, while Nikkei 225 increased by 8.42%.
- Despite 125% tariff, the Shanghai overall index of the mainland China increased 1.79%.
- On Wednesday, April 9, the Nasdaq Composite Index rose 12.16%, which was the largest single-day profit since January 2001.
- S&P 500 9.52%jumped, it increased the biggest single-day since October 2008.
However, analysts took care. Brian Tyncangko, Editor and Analyst of Stannsberry Research, said:
“We are not out of the forest. Bear market rallies are often the most powerful but short -lived. The US and China are still in a dangerous phase of growth.”
Peter Berezin of BCA Research said the current American tariffs are the highest since the 1930s, suggesting that structural risks remain despite the market optimism.
USD/CNY trends outlined the possible impact of tariffs on China’s economy. CN Wire said:
“China’s onshore Yuan weakens at 7.3518 per dollar since 26 December 2007. The offshore yuan is more than 7.3700 per dollar, which is the latest at 7.3702.”
A weak yuan can partially soften the tariff effect, but a business deal is important. China seems to follow his playbook from Trump’s first term, raising the expectations of a business deal. To date, China has responded with mutual tariffs and weakened Yuan. In 2020, the US and China signed the phase a trade agreement, which followed the same pattern as tariffs and yuan depreciation.
