USA / China Trade War – Resurrected

It’s common knowledge that Trump has pointed out the cause of this COVID-19 pandemic at China and he has made little attempt to hide his opinions on the matter.

What’s interesting is that other countries are now also questioning the origination of COVID-19. Most noticeably, an enquiry by Australia was met by ‘bad trade deal’ threats from China. This has most certainly raised a few eyebrows.

On Thursday Trump said he doesn’t want to speak to Xi and that the U.S would save $500 Billion if it cut ties with China. Whilst Trumps frustrations have mostly been vocal, the administration has now taken tangible action.

U.S. stock index futures slipped this morning as the Trump administration blocked shipments of semiconductors to China’s Huawei Tech Giant, from global chipmakers. Tightening the tension between Washington and Beijing. Moreover key republican lawmakers have proposed cancelling more than $1 trillion in U.S debt held by China, to make them pay for the costs of the global pandemic.

Markets are currently spooked on fairs that a revival of the U.S – China trade war can exacerbate the economic impact caused by the virus.

“The overarching concern that we’ve had as this epidemic has worked its way around the globe is that U.S.-China relations are heading in the wrong direction and that can cause a worse economic effect than the pandemic itself,” 

Art Hogan, chief market strategist at National Securities in New York.

In response to this, China have urged the U.S to drop ‘the cold war mentality’ and cooperate in the fight against the virus. As U.S elections approach in November, it is highly likely that Trump will increase his accusations towards China and their involvement with Covid 19.

If the U.S further blocks the technology chip supplies to Huawei, China will activate the ‘unreliable entity list’. This allows China to restrict/ Investigate US companies such as Apple, Qualcomm etc.

It is certainly not the end of this debut, expect there to be more aggressive action from both U.S and China if Trump persists.