Donald Trump’s ‘Thanos-like’ tariff threat to China adds to ‘risk of global recession’, analysts say

One analyst compared the US president to the character from the ‘Avengers’ who wiped out half of all life in the universe with a snap of his fingers

Companies in China and Hong Kong rush to seek legal advice amid threat that the United States will increase tariffs on Chinese goods from 10 per cent to 25 per cent

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US President Donald Trump tweeted on Sunday that “the 10 per cent will go up to 25 per cent on Friday”. Photo: AP

Finbarr Berminghamin Brussels,Karen Yeungin Hong KongandOrange Wang

Published: 2:37pm, 6 May 2019Updated: 11:28pm, 6 May 2019

US President Donald Trump’s vow to increase tariffs on US$200 billion of Chinese goods from 10 per cent to 25 per cent “will definitely heighten the global recession risk”, according to analysts.

Despite the widespread assumption that trade talks were progressing smoothly and that negotiators from China and the United States were close to reaching a deal, Trump tweeted on Sunday that “the 10 per cent will go up to 25 per cent on Friday”. He also threatened to impose a 25 per cent tariff on “US$325 billion of additional goods sent to us by China” that “remain untaxed, but will be soon”.

Trump said that trade talks were progressing “too slowly” – contrary to the views of many trade watchers, who fear that they were actually progressing too quickly, leaving room for error.

The tweets roiled markets in China and Hong Kong, leading one analyst to compare Trump to Thanos – the character from the box office smash Avengers who wiped out half of all life in the universe with a snap of his fingers.

“He snapped his fingers and rattled the market,” said Sheng Liugang, director of the trade and development research programme at the Chinese University of Hong Kong, adding that the move would add to pressure on the Chinese economy, which outperformed expectations in the first quarter of the year, largely due to stimulus measures from Beijing.

The tweets led to speculation that the latest round of talks, set to take place this week in Washington, would not go ahead, or would do so on a more low-key basis, throwing into jeopardy a deal to end a trade war which has acted as a dark cloud over the global economy for the best part of a year.

“The return of trade war will definitely heighten the global recession risk,” said Ken Cheung Kin-tai, senior Asian currency strategist at Mizuho Bank. “The tariffs will also bring back uncertainties and hit the business confidence. Investors will hasten the progress of relocation of Chinese factories to elsewhere, such as Southeast Asia, to mitigate the tariff risks, souring the investment and employment in China.”