On Friday the US imposed even more tariffs on Chinese goods by more than doubling tariffs on many Chinese products coming into the US. He increased the amount from 10% to 25% as the US-China trade wars appear to be showing little sign of ending soon.
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US President Donald Trump went on to claim that he is in ‘absolutely no rush’ to conclude a trade agreement with the world’s second largest economy. This means that China are likely to respond with tariffs of their own so this protracted deal is far from being resolved in the near future as far as I’m concerned.
The tariff was initially due to come in at the start of the year but was delayed in an attempt to have the talks concluded by now. However, what this does mean is that US consumers could ultimately pay the price of increased costs on goods so this could potentially have an adverse effect on the US economy.
According to a number of different news reports it is the Chinese who are working towards concluding a deal but the US appear to not be too concerned about getting this sorted in the near future.
During 2018 the Chinese imported a total of $539bn worth of goods in to the US economy and Trump is threatening to tariff as much as $325bn worth of imports, so things could still get worse.
US inflation data came out at 2% on Friday afternoon, but as the data came in below expectations this caused the dollar to weaken marginally against the pound.
The reason why the dollar weakened is that arguably the Federal Reserve (Fed) may be influenced by the data and keep interest rates on hold for longer than expected. At the start of the year the expectations were originally for 2 rate hikes but with inflation lower then this means that the Fed may not change rates for the foreseeable future and could potentially change their minds by even looking at a rate cut in the longer term.
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