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China, Europe warn trade war could trigger global recession

26 June 2018
China, Europe warn trade war could trigger global recession

That could open USA firms like Apple and General Motors up to new forms of retaliation from China and experts worry it also marks another step in government intervention in the free market, a "radical departure" for the United States that could prove mutually destructive.

As Lim explained, US businesses will be hurt as a result of the escalating trade war.

News outlets reported that the U.S. Treasury Department will announce later this week new restrictions that will block Chinese-owned firms from buying U.S. companies that develop sensitive technology, such as robotics and aerospace.

New export controls would make it more hard for U.S. firms to sell technology to China if Washington deems it to be "industrially significant".

"A trade war means lower global GDP".

Vehicle manufacturer Daimler AG has warned that tariffs will lower its profits, illustrating the financial impact of the simmering conflict.

Harley-Davidson fell 6 percent after it said it will start building some motorcycles bound for Europe in factories overseas in response to tariffs by the EU.

The disagreements were also about US tariffs on $34 billion worth of Chinese goods that are scheduled to go into effect on July 6, which China said would trigger retaliation involving its imports of American soybeans and motor vehicles.

Economists at Deutsche Bank tallied the potential damage in a note released late last week.

Late last month, Trump infuriated United States allies - from the European Union to Canada and Mexico - by imposing tariffs of 25 percent on imported steel and 10 percent on aluminum.

Investors aren't so sure. Top chip stocks such as AMD, Micron and Nvidia are down more than 5 percent.

Meanwhile, the Dow Jones Industrial Average has dropped by more than 400 points since the markets opened.

Volume on USA exchanges was 7.74 billion shares, compared to the 7.32 billion average for the full session over the last 20 trading days.

He also made the point that nowadays the tech stocks such as Facebook, Amazon, Netflix, Google (Alphabet) and others such as Apple make up 25% of the S&P 500 Index!

The so-called FANG stocks, which have led momentum in US stocks, were lower after having hit record intraday highs last week.

Strategists at Bank of America Merrill Lynch pointed out that a yield curve inversion (where 2-year bond yields are higher than 10-year bond yields) have preceded all seven of the past recessions, going back to 1970.