NEW YORK: Fears of tariffs and a potential global trade war have jostled US stocks over the past few months, but there is a sense among investors that the market is taking the drum beat of rhetoric and statements more in stride. In the latest salvo, US President Donald Trump announced hefty tariffs on $50 billion of Chinese imports, and Beijing threatened to respond in kind. But even as the developments threatened to ignite a trade war between the world’s two largest economies, the equity market largely shrugged it off.
The benchmark S&P 500 index ended down only 0.1 per cent.
That paled compared to losses earlier in the year that were sparked by fears of a US-China trade war that would be detrimental to economic growth.
“The market has gotten reasonably comfortably numb to this tariff stuff,” said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana. “They are becoming more accustomed to this being a first foray and negotiating tool.”
The US Customs and Border Protection is to begin collecting tariffs on an initial tranche of 818 Chinese product categories on July 6.
“It’s kind of the cry-wolf syndrome,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia. “I think people fear the tariffs and the uncertainty about it, but think, ‘OK, this is just another negotiating point.’”
On March 1, the S&P 500 declined 1.3 per cent when Trump announced plans for hefty tariffs on steel and aluminium imports to protect US producers. Later in March, the S&P 500 tumbled 2.1 per cent on another day of apparent escalating US-China tensions.
So far, Trump has taken little action beyond tariffs of 25 per cent on steel and 10 per cent on aluminium on imports from China, the European Union and other countries. — Reuters
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