Events have moved disturbingly swiftly since Donald Trump surprised everyone last week by announcing plans for a fresh wave of tariffs on Chinese imports. Beijing retaliated by targeting US agricultural products and allowing its currency to depreciate against the US dollar. Mr Trump duly fired off a tweet accusing the Chinese of currency manipulation, a clear sign that he is preparing to ratchet up the tension still further. Financial markets have responded predictably to this major escalation in the economic cold war. Share prices fell and investors sought out the traditional safe haven assets: gold and the swiss franc.
When the US president announced his first wave of protectionist measures in March 2018 he boasted that trade wars were good and easy to win. That’s not the way that the markets see things. They see the world’s two biggest economies digging in for the long haul and Mr Trump intensifying global trade tensions in order to pressurise America’s central bank, the Federal Reserve, to cut interest rates. » | Editorial | Monday, August 5, 2019
