This week, investors continued to focus on trade issues. This is after Donald Trump decided to add tariffs to Chinese goods worth more than $200 billion. This week, the Chinese retaliated against the US and announced that they would add tariffs on goods worth more than $60 billion. While the size of these goods is small, they have designed it to have major impacts on the electoral college because most farmers voted for Trump. Traders now hope that the upcoming G20 meeting will lead to dialogue between China’s Xi Jinping and Trump.
In other trade news, the Trump administration announced that it would differ the tariffs of the global automobile brands for six months. The administration had promised to add more tariffs to these imports, which are aimed at the European Union. Analysts argue that such tariffs will raise the price of an average car by at least $4000. It would also affect the European economy, which would lose at least $20 billion every year. In addition, more US jobs would be lost.
On Wednesday, Donald Trump signed an executive order banning Huawei from the country. The executive order was long in the works but was not signed because of the ongoing talks. The ban led to more talks of boycotting Apple in China.
The week started with the announcement by Saudi Arabia and the United Arab Emirates that their oil infrastructure and ships were under attack. The two countries pointed their finger on Iran, their biggest rival in the region. The Houthi rebels who are supported by Iran said that they were behind these attacks. In response, Saudi Arabia had airstrikes in the Houthi region of Yemeni.
At the same time, it was reported that the Trump administration was torn on how to respond to the provocations by Iran. On the one hand, hawkish members like John Bolton have called for military war with Iran. Donald Trump on the other hand has opposed such a measure, arguing that it would not yield any results. Instead, he has called for talks between the US and Iran.
Another big news this week was that Theresa May was considering resigning. The prime minister, who came to power after the Brexit vote said that she would resign after the UK decides on how to leave the European Union. She also said that she would submit her Brexit bill to parliament again in early June. Experts believe that it will be rejected again. Meanwhile, data from the UK showed that the unemployment rate dropped to 3.8% in March.
It was a low data week. The biggest was from China, where the retail sales rose by 7.2%, which was lower than the expected 8.6%. The industrial production rose by 5.4% while fixed asset investments rose by 6.1%. In Canada, the CPI remained unchanged while in the US, the manufacturing production declined by -0.5%. In Australia, the unemployment rate moved up slightly to 5.2% while the participation rate rose to 65.8%.