The tariff truce between China and the U.S. last month eased some of the tension and gave stock markets hope that a lasting peace is within reach. But with duties on hundreds of billions of dollars of goods still in place and a separate regional skirmish heating up, don’t look for an end soon in the global trade wars.
The latest signs of Asia’s slump are due later this week. Chinese imports probably dropped in June, a report Friday is forecast to show, after contracting every month this year except April. The culprits: a weaker domestic economy and softening overseas demand. Exports in June are also expected to shrink.
The slowdown is spreading across the region, with Japanese, Taiwanese, and South Korean exports also hit. Adding to the stress are signs that a free-trade-espousing country like Japan is using protectionist trade policies to achieve a political goal.
Japan is considering removing South Korea from a list of trusted nations that receive preferable export treatment — the latest turn in a feud dating back generations to the colonization of the Korean peninsula. As a result, South Korea’s Samsung has lost about 16 trillion won ($13 billion) in market value this month because it relies on Japanese materials.
While it’s unclear yet if Japan’s decision will lead to massive disruption of trade flows, it adds to an already growing list of risk for companies and investors.
Charting the Trade War
The trade war has cost American soybean growers their biggest customer, and the industry has struggled to find other buyers big enough to fill the hole left by China.
