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Oil Dips After Further Shots Fired Between the USA and China

April 6, 2018 at 14:56 by Matt Jackson

China threatened a “fierce counter strike” on Friday, hours after President Trump threatened further levies against Chinese manufactured goods. Describing China’s threat to impose tariffs on $50 billion of US goods, which was itself a retaliatory threat after the US threatened similar sized tariffs against China, as “unfair retaliation”, Trump ordered officials to identify a further $100bn of goods that could be levied.

Arguably more worrying was a statement from Chinese Commerce Ministry spokesman, Gao Feng, who said that there would be no chance of negotiations under the current circumstances.

The news brought oil prices down during the day’s trading, with WTI crude oil dipping below $63 while Brent crude slipped below $68, although both recovered later in the day. WTI crude was trading at $63.29, a drop of 0.39%, and Brent crude was trading at $68.24, a loss of 0.13%, at 15:30 GMT.

No additional tariffs have been introduced yet, but Trump has said that the first round of tariffs on $50 billion of goods will be introduced in 2 months’ time following consultation and presumably allowing some time for negotiation between the two parties. China has said that the introduction of their proposed tariffs will depend on action by the USA.

However, the exchanges have become increasingly heated and started with the USA’s announcement that they would impose tariffs on steel and aluminum. On announcing that they would add taxes to $50 billion of Chinese goods, the administration said that a probe had identified policies that were used to transfer intellectual property to Chinese companies, representing unfair trading policies.

Several groups have expressed concern over the possibility of a trade war. China has so far stopped short of listing US tech products, but the country is responsible for buying approximately one quarter of US semiconductors. US stock futures and a majority of Asia’s stock markets traded in the red on Friday, as a result of the news, and analysts and investors will be keeping a close eye out fur further developments from the two nations.
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