On Tuesday (04/03), China swiftly retaliated against the new US tariffs by announcing a 10%-15% increase in import tariffs covering a range of American farm and food products, as well as imposing export and investment restrictions on 25 US companies.
COMMENTARY:
OLE HANSEN, HEAD OF COMMODITY STRATEGY, SAXO BANK
"From a pricing perspective, this comes at a very bad time for US corn prices, which are already under selling pressure from hedge funds who have in recent months amassed very large and sustained bets on higher prices.
"This will further increase China's dependence on Brazilian corn and soybeans and cause a lot of stress among US farmers who will be making their spring planting decisions in the coming weeks."
CHARU CHANANA, HEAD OF INVESTMENT STRATEGY, SAXO, SINGAPORE
"While the moves from China may not be particularly bold, there is reason to believe that China wants to be at the negotiating table with Trump rather than sitting back and taking the hit. The move does carry the risk of escalating trade tensions before a resolution.
"China's actions could also be indicative of the fact that they may be more confident in responding to the current domestic headwinds, especially as they play catch-up in the AI race. There will be increased focus on what policy stimulus comes out of the twin sessions."
TOMMY XIE, HEAD OF GLOBAL MACRO RESEARCH, OCBC BANK, SINGAPORE
"Exchange rates are a relative concept, as are tariffs. As long as other countries are also subject to tariffs, or have expectations of them, the situation won't be as bad. The concern is that only one person is subject to tariffs. If the US charges everyone, it will be seen as paying protection costs."
CHARLES WANG, FOUNDER, DRAGON PACIFIC CAPITAL MANAGEMENT, SHENZHEN
"The US is facing a number of challenges, and a trade war will only make them worse. These include inflation, the relationship between the US and Europe, and China.
"For China, we have reduced our trade dependence with the US from 23% to about 13%, so the immediate impact is limited. In addition, China's economy is recovering, and the parliamentary meeting will provide more signals to support the economy.
Therefore, I don't think the stock market trajectory will change. There are some restrictions in the Hong Kong market, which, if any, require a slight correction. However, it's okay. It's not a big deal."
LIU JINLU, AGRICULTURAL RESEARCHER AT GUOYUAN FUTURES, BEIJING
"This news has raised concerns about tightening domestic agricultural supplies, which benefits the sector. China's 10% tariff on US soybeans will increase costs and reduce US imports, causing China to increase imports from Brazil and other countries.
"However, South America, especially Brazil, is approaching its soybean export limit after years of growth (2024 exports are expected to reach 96 million tons). Currently, Brazilian soybeans have not arrived in large quantities at Chinese ports, but they are expected to arrive in Q2. With the additional US tariffs, the already tight soybean stocks will be further burdened." GENEVIEVE DONNELLON-MAY, RESEARCH ASSESSOR AT OXFORD GLOBAL SOCIETY, MELBOURNE
"While the new tariff announcements are not as severe as the 25% in 2018, they target many of the same agricultural products. Moreover, the 10% tariffs could give Beijing the opportunity to raise tariffs on U.S. agricultural goods by 10% or even 20% in the coming months and years." (Newsmaker23)
Source: Investing.com
