US Trade War Tariffs Postponed

14th of August, 2019

In what some market participant have seen as a softening of the stance of the US Administration, overnight President Trump delayed the start of the next wave of tariffs on Chinese goods.

After several weeks of increasing brinkmanship between the US and Chinese, the US announcement overnight was welcome news by markets broadly. Whilst the delay of these tariffs until December 15 is of itself a good sign, arguably the more important note was the continuation of talks between the two sides and scheduling of future negotiations.

The announcement essentially delayed the implementation of a 10% tariff on September 1st for a variety of consumer discretionary goods and the removal from the items listing of some health and safety good all together. For some time Trump has been adamant that any costs brought about through the implementation of tariffs would be solely on the Chinese. Reading between the lines, this is the first admission that this logic isn’t necessarily realistic. US consumers at some point in time would have been effected. As with all announcement from both sides, we will have to wait and see as to what actually transpires when these key dates arrive.

In local data out yesterday, the NAB Business survey showed little change from last months weak numbers. Overall, Business Confidence recouped some of its losses last month up 2pt to 4, whilst Business conditions did the exact opposite losing 2pts, printing at 2. The key figure that that is of most concern for the outlook was a softening in employment, down 5pt to zero.

Later today, the Westpac Consumer confidence number will be of interest after last months capitulation. Any reversion towards the 100 level (last month 96.5) would be a welcome sign. Additionally, wage price data out today should add further clarity to the outlook when combined with tomorrows employment update.

Matthew Dunshea

Client Relationship Manager