Singapore shares may tumble after U.S. President Trump doubled down on threats to impose tariffs on China, claiming he was retaliating for China’s retaliation.
If the war of words and threatened tariffs becomes a real trade war, that would be markets’ worst fear come to life, especially for trade-dependent nations such as Singapore.
In the United States, futures indicated that the Dow Jones Industrial Average would drop more than 400 points later in the global day, with the S&P 500 and the trade- and immigration-dependent tech sectors also appearing set to take a sizable hit.
In a development that may be more serious than what can be summed up as “tit-for-tat,” late on Thursday U.S. time, Trump ordered the U.S. Trade Representative to consider imposing tariffs on an additional US$100 billion of Chinese products.
He claimed that was in retaliation for China’s “unfair retaliation” after the mainland’s quick, strong response to his initial threat of tariffs on US$50 billion in exports was to say it would impose tariffs of the “same strength.”
It may have been China’s threats to put tariffs on imports of U.S. soybeans, which are largely produced in states which voted for Trump in the election, which spurred Trump to lash out further. His statement said he had asked the Agriculture department to look at ways to protect farmers.
With China in the midst of a bank holiday for the Qingming Festival, or tomb-sweeping day, it isn’t clear how quickly it will respond this time.
In any negotiation, however, China will likely be looking to preserve face. Trump, however, does have a long history of making extreme threats, only to retreat later, a far-from-secretive and somewhat dubious negotiation tactic his biographer described in detail in “The Art of the Deal.”
The Straits Times Index ended Thursday up 1.98 percent at 3405.65.
In a technical analysis, Phillip Securities on Thursday said the 3354-3341 support zone was a key line in determining whether the index could head into a correction.