Asian markets mostly rose on Tuesday after Donald Trump said he would hit China with another round of tariffs but give some room for talks before jacking them to the highest rate.
The latest volley from the White House will see $200 billion worth of goods taxed at 10 per cent from September 24, going up to 25 per cent from January 1 if the sides are unable to hammer out a deal.
Trump also warned that another $267 billion had been lined up if Beijing retaliates.
With $50 billion of goods already being hit, that would mean Washington will have subjected virtually all goods China ships to the US to tariffs.
China on Tuesday warned it would “take countermeasures”, adding that the “US insists on increasing tariffs, which brings new uncertainty to the consultations between the two sides”.
‘Room to negotiate’
After an early sell-off, Asian markets enjoyed a bounce on hopes officials from the world’s top two economies will be able to thrash out an agreement before the end of the year.
The optimism has been boosted by the fact Trump left off some key items from the latest target list, while he is also due to meet Chinese President Xi Jinping in November and will likely want a deal in place.
“While the US tariffs salvo is hardly middling, it’s not as bad as it could have been, so unless China hits with draconian measures, markets should remain supported after this morning’s knee-jerk reactions,” said Stephen Innes,
head of Asia-Pacific trading at OANDA.
“Ultimately the graduated tariff hike allows more room to negotiate before the thumping 25 per cent levy gets triggered, so perhaps China may temper their response accordingly.”
By the end of the day Shanghai had rallied 1.8 per cent and Tokyo was up 1.4 per cent, while Hong Kong gained 0.6 per cent. Seoul gained 0.3 per cent.
However, Sydney dipped 0.4 per cent and Singapore 0.1 per cent.