White House Not Happy With Roll Back On China Tariffs

The trade war between the United States and China rages on, and the uncertainty that results from this continues to put pressure on the global stock market.  As such, global stocks are starting to peel off of 21-month highs after a week of strong performance from riskier assets. 

This shift comes as the US and China reached an agreement to hold back on the existing tariffs. It is part of a “phase one” trade deal, a compromise that while offering some relief, perhaps, is not nearly enough for the White House—and investors, alike—to regain confidence.  Accordingly, US stock futures appear to be heading for flat or only minimal gains.

And it looks like this sense of abundant caution is not reserved strictly for US market participants.  The pan-European STOXX 600 also took a bit of a dip, slipping 0.2 percent after chipping away at four-year highs, on Thursday.  Also, shares in Asian markets started to slink away from six-month highs and the MSCI world stock index also started to nudge away from a 21-month high. 

Of course, reaching a trade deal is the core driver for market strength right now.  This suggests that the slight dip in the global stock market was a simple reaction to the latest US-China trade war development.  This sentiment, though, seems to contradict what appeared to be a surge in optimism after Beijing and Washington DC agreed to roll back their tariffs in this first phase of the new deal. 

At the same time, tariffs are the core to President Trump’s plan, so his administration views this as a bit of a concession.  As a matter of fact, former chief strategist Stephen K Bannon comments, “President Trump’s tariffs are the centerpiece of this confrontation with the Chinese Communist Party—and they have worked brilliantly, forcing the Chinese to the table. Now, China is trying to re-trade the president and remove the tariffs.”