US President Donald Trump’s senseless trade war has sparked a sell-off that wiped trillions of dollars off global bourses and led to concern the global economy would tip into recession.
Mainland China and Hong Kong stock markets have received welcome support from Beijing’s sovereign wealth fund to soothe rattled investors who saw their net worth crumble on Monday.
The respite from the storm may prove short-lived. Trump has warned he may slap another 50 per cent in import tariffs on Chinese goods after Beijing matched its initial 34 per cent tariffs.
He has begun an ill-advised race to the bottom, ignoring years in which consumers in the United States stretched their household incomes through enjoying low or zero trade barriers that made goods affordable.
Now, higher inflation is surely on the way, thanks to US import tariffs on everything from clothing to video games and smartphones.
The meltdown in the markets and threats of inflation and recession have not deterred Trump, who says the smart response is to come to the table to negotiate a deal.
While some smaller economies including Vietnam have chosen to talk, so far, Canada and the European Union have joined China in calling his bluff.
