MUFG Research discusses the latest round of US tariffs on China in light of the confirmation by the US Trade Representative’s Office that a 25% tariff would be implemented on 279 products from China, with a value of USD 16bn from 23rd August.
"Of course the stronger than expected trade data from China may well reflect a rush of orders in anticipation of further tariffs being implemented. So the dollar has weakened modestly but we doubt this will prove sustained.
The tariff step confirmed yesterday was fully expected. The focus is now really on the current US Treasury review of a 10% tariff being implemented on a further USD 200bn of imports from China. That review will end on 6th September.
In the meantime, we would expect only limited further dollar selling with trade tensions likely to escalate further over the coming weeks and months,"MUFG argues.