Markets react to Trump threats to withdraw China ‘trade-truce’ if issues unresolved

US president Donald Trump has said on Tuesday that he would revert to tariffs if issues with China were not resolved.

Trump and Xi truce-trade might be over

This comes after Trump and Xi agreed at the G20 summit last week, that there would be a 90-day cease-fire, putting a temporary end to the on-going trade conflict.

The US president said he was also open to the possibility of an extension of the trade-truce if all goes well.

But, the halt-promise has its conditions, and would be deemed void if issues were not resolved, as Trump relayed on Tuesday.

“If it is, we will get it done,’” and “But if not remember, I am a Tariff Man.” Trump tweeted.

Market reaction

Trade wars between the US and China have long had their impacts over the financial markets, and Wednesday was no different.

Investors reacted with relief upon ceasefire news last week, when Trump and Chinese President, Xi Jinping agreed to put their differences on hold.

But, the relief didn’t last long, as markets overnight sold-off with doubts quickly coming back, fearing more uncertainty after Trump's twitter rants.

Trump has also said China is supposed to start buying agricultural products immediately and cut its 40% tariffs on US car imports.

While Trump described the deal with Xi as "an incredible deal," a lack of detail from the Chinese side has left investors and analysts wondering where it all stands, especially since Trump has long accused China of unfair trade practices.

IG Market Analyst Kyle Rodda says last night’s jitters, in a macro-sense, were brought- about by a slew of disappointing news.

"The post-G20 rally has been faded, as traders question the longevity and substance behind the so-called deal between the US-China, after several top White House advisers failed to substantiate what outcomes have been agreed upon between the two trade-waring nations." Mr Rodda said.

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IG Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.

Find articles by writer