China and the US on the brink of a Trade War

BEIJING- Hours after US President Donald Trump imposed a $50 billion dollar tariff against Chinese goods, it took China just 11 hours to retaliate against the embargo.  The Chinese government announced that they will be imposing their tariffs after US said they are going to increase tariffs to 25% on 1300 Chinese companies.

The 25% tariff amounts to $50 billion against the Chinese goods and services, the US administration said the reasons behind the decision is because they believed China are lying with their inflation numbers and their trade deals are unfavorable to the market.

Wall Street Bond King analyst Jeffrey Gundlach, the chief executive of DoubleLine Capital LP, said the markets are afraid the actions from both sides and nearing a trade war which can massively impact the global market.

He said, “It is more effective as a threat. If they sell, they have no threat,”

“It would only escalate the situation and eliminate their leverage.”

China has imposed a ban on trade with America on soybeans, planes, beef, cars and chemicals.

Jeff Klingefonger a portfolio manager who oversees more than $6 billion at Thornburg Investment Management Inc,”If they wanted to pull the nuclear switch, if they committed to dumping Treasuries, it would have an immediate and temporary impact on money markets in the United States,”

“But I think it is a bigger hit to the sustainability of what they’re trying to accomplish.”

Photo Credit- Sunday News

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