US President Donald Trump has announced that $300 billion worth of Chinese goods will be hit with a 10% tariff from 1st September 2019. Here’s how it could affect the ASX.
Trump’s New Tariffs
Trump outlined in a Twitter thread that the US and China were making progress, saying, “our representatives have just returned from China where they had constructive talks having to do with a future Trade Deal”.
However, Trump said China tried to re-negotiate the deal and failed to increase their consumption of US agricultural goods as was previously agreed. As a result, Trump has decided to impose a 10% tariff on the, “remaining $300 billion of goods and products coming from China into our country”.
Trump also reportedly said that the 10% tariffs were a short-term measure and could be lifted to more than 25%.
In response to the news, the Dow Jones Index fell about 1%.
The US Chamber of Commerce previously warned that new tariffs covering all goods could cost the average American family of four more than $2,000 annually.
How Does This Affect The ASX?
The ASX is expected to open lower as these new tariffs keep uncertainty high. Australia is a small nation and we rely heavily on global trade, particularly our commodities exporters. If these tariffs cause growth to slow in the US and China or if Australian exporters start seeing barriers go up, the economy will feel the effects.
Large companies like BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO), Amcor Limited (ASX: AMC), The a2 Milk Company Ltd (ASX: A2M) and Macquarie Group Ltd (ASX: MQG) will all be ones to watch today.
For three businesses that may not be as heavily impacted, have a look at the free report below.
Disclosure: At the time of writing, Max does not own shares in any of the companies mentioned.