Asian markets mostly rose yesterday after Donald Trump said he would thump China with another round of tariffs but give some room for talks before jacking them up to the highest rate.
The latest volley from the White House will see $200bn worth of goods taxed at 10% from September 24, going up to 25% from January 1 if the sides are unable to hammer out a deal.
Trump also warned that another $267bn had been lined up if Beijing retaliates.
China on Tuesday warned it would “take countermeasures” after the latest threats. With $50bn of goods already being hit, that would mean Washington will have subjected virtually all goods China ships to the US to tariffs.
However, after an early sell-off, regional markets enjoyed a bounce on hopes officials from the world’s top two economies will be able to thrash out an agreement before the end of the year.
The optimism has been boosted by the fact Trump left off some key items from the latest target list, while he is also due to meet Chinese President Xi Jinping in November and will likely want a deal in place.
“While the US tariffs salvo is hardly middling, it’s not as bad as it could have been, so unless China hits with draconian measures, markets should remain supported after this morning’s knee-jerk reactions,” said Stephen Innes, head of Asia-Pacific trading at OANDA. “Ultimately the graduated tariff hike allows more room to negotiate before the thumping 25% levy gets triggered, so perhaps China may temper their response accordingly.”
By the end of the day Shanghai had rallied 1.8% and Tokyo was up 1.4% while Hong Kong gained 0.6% in the afternoon. Seoul gained 0.3% and Wellington put on 0.5%.
However, Sydney dipped 0.4% and Singapore 0.1%. “There’s still time and room for China and US to engage in negotiations,” Zhang Gang, Shanghai-based strategist with Central China Securities, told Bloomberg News.
“The US moves are completely uncontrollable but China can manage its policies to counter the impact and stabilise its economy.”
Regional currencies also saw an afternoon recovery having been in the red earlier. The yuan was flat, while the South Korean won and the Australian dollar were 0.3% higher. The Mexican peso gained 0.2%, the Russian rouble edged 0.3% higher and South Africa’s rand put on 0.4%.
However, Indonesia’s rupiah fell 0.2% as it wallows around levels last seen in 1998 during the Asian financial crisis.
In Tokyo, the Nikkei 225 closed up 1.4% to 23,420.54 points; Hong Kong — Hang Seng ended down 0.6% to 27,110.35 points and Shanghai — Composite closed up 1.8% to 2,699.95 points yesterday.

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