Trade Negotiation in Jeopardy After China Reneged its Commitment

Summary

  • The odds of trade war escalation rises after Trump sent a pair of tweets threatening to increase tariffs to Chinese goods.
  • If there is no deal by this Friday, the tariffs to Chinese goods will rise to 25% from 10% on $300 billion. Additional $325 billion of Chinese goods will also get 25% tariff.
  • The rapid deterioration is due to the reversal of China’s commitment to address the U.S. core complaints.
  • U.S companies with huge presence and sales in China, like Apple, can suffer if there’s trade war escalation.
  • Elliott Wave Analysis on Apple suggests another major correction can happen.

$AAPL Apple Elliott Wave Daily Chart

Conclusion

The months long trade negotiation between China and U.S. come into the final week. Recent deterioration of the talk due to China’s reversal of its commitment is a cause of concern for investors. The rising odds of escalation this week sent the stock market and commodities tumbling. The selloff can potentially continue if there’s no agreement by this week. U.S. companies with significant stake in China, such as Apple, can suffer in the case of trade war escalation.

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