China has placed counter tariffs on U.S. imports after President Trump put a 10% tariff on Chinese goods. The Chinese tariffs will come into effect on February 10.
Despite the escalating trade war, Asian shares climbed this morning, with the Hang Seng Index in Hong Kong growing 2.10% to 20,642.58. Japan’s Nikkei 225 was up 1.61% to 39,140.41, South Korea’s Kospi rose 1.63% to 2,493.99, and Australia’s S&P/ASX 200 rose 0.13% to 8,390.20.
The choice of a February 10 start date for China’s retaliatory tariffs leaves room for last-minute diplomacy before the measures take effect. The coming days may see discussion between President Trump and China’s Xi Jinping. However, if Trump sees the Chinese tariffs as a direct challenge, he could respond by escalating with additional trade restrictions.
During the first Trump administration Chinese-U.S. tensions were high, and Trump imposed tariffs on goods such as solar panels and washing machines. China learnt from this and looked for trade opportunities outside the U.S. Many Chinese businesses moved some of their manufacturing operations to Vietnam and Malaysia. This should mitigate the hurt the country’s businesses feel this time round.