Investors belt ASX as Trump’s tariffs against China raise spectre of trade war
MORE than $30 billion has been wiped from the Australian share market amid growing fears the US and China are dragging the world into a debilitating trade war.
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MORE than $30 billion has been wiped from the Australian share market amid growing fears the US and China are dragging the world into a debilitating trade war.
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And steelmaker BlueScope has suffered its worst single-session market rout in seven months, stripped of $510 million in value after the White House announced Australia’s exemption from steel tariffs would only be temporary.
The benchmark Australian share index, the ASX 200, fell 2 per cent yesterday in its worst session for more than six weeks, ending at its equal-lowest since October.
It came after US President Donald Trump announced overnight on Thursday he was introducing tariffs on up to $US60 billion ($77.8 billion) of imports from China every year.
Signing a memorandum aimed at curbing “China’s economic aggression”, Mr Trump said he was reacting to cyber and intellectual property “theft”. China promptly retaliated, issuing a list of 128 products imported from the US that it may hit with tariffs of 15 to 25 per cent.
The value of the US exports, including goods such as pork, apples and steel piping, was estimated at $3 billion a year.
Sending a further shudder through the Australian market, the White House also announced that exemptions — extended to countries including Australia — from its 25 per cent tax on steel imports and 10 per cent tariff on aluminium would only be temporary.
They will for now only run until May 1, subject to further negotiations. Mr Trump’s policy adviser Peter Navarro also outlined plans for quotas limiting the amount of tariff-exempt steel that could be imported into the US from various trading partners.
Quotas on tariff-exempt countries would ensure they were not used as backdoor entry points to the US by non-exempt countries, he said.
Shares in BlueScope Steel, Australia’s biggest steelmaker, tumbled 5.9 per cent in the wake of that revelation, closing 92c lower at $14.78.
The broader Australian market lost $34.1 billion in value amid a broad selling spree. It followed a slump of almost 3 per cent on Wall St overnight on Thursday, with the Dow Jones Industrial Average down more than 700 points.
China’s commerce ministry said the decision by Mr Trump “seriously hurt the multilateral trading system” and it would consider legal action through the World Trade Organisation.
ANZ economist Raymond Yeung said countries that traded with the US and China might be dragged into the increasingly bitter battle.
“Although the face value of the US tariff will be small, President Trump may push other countries to take sides, resulting in a divided world,” Mr Yeung said.
“The scale of the trade war would be broadened. This is the biggest risk lying ahead.”
Bell Direct equities analyst Julia Lee said investors were now waiting to see how the US and Chinese tariff announcements manifested in real terms.
“Given we are talking about the two largest economies in the world, this could have a significant impact on global growth and that is the fear of the market,” Ms Lee said.
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