Volatility in global markets: the impact of US-China tariffs - Chris Harmse

VOLATILITY in share, bond, and exchange rate markets is set to prevail for a long time.

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The sudden back-paddle of President Donald Trump's tariff calls, by decreasing tariffs to most countries back to only 10% (except for China), was, as expected, a sign that he called the bluff of all the countries over the past few weeks.

Analysts also feel that his administration may not have expected the backlash from US citizens as a gloomy high inflation rate, a potential US recession, and increasing unemployment surfaced. The theoretical principles that higher tariffs will always lead to welfare losses for consumers has surfaced strongly.

JPMorgan Chase CEO Jamie Dimon said the US economy faces "considerable turbulence" against the escalating US-China tit-for-tat tariff announcements, which creates fear amongst consumers, investors, and businesses.

The announcement that China on Friday reacted to Trump's ballooning tariffs, raising its duties on imports of US goods to 125% from 84%, accelerated worries of volatility across the globe.

The White House on Thursday raised US tariffs on Chinese imports to 145%, from the 125% that was announced earlier.