Trump's tweets spook markets: There we go again

He loves playing this game. US President Donald Trump upped the rhetoric to further escalate the trade war with China, once again sending financial markets across the world in a tizzy on the morning after. In a series of tweets on Sunday, Trump declared that the 10 per cent tariff imposed on non-tech goods from China would be hiked to 25 per cent this weekend. "The Tariffs paid to the USA have had little impact on product cost, mostly borne by China. The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!", he tweeted.
Even as global markets were coming around to believe that real progress was being made in the US-China trade negotiations and that a deal was imminent, Trump's tweets - as they so often have recently - upset the applecart and sent investors scurrying for cover. Starting at home, the Dubai Financial Market General Index slipped 0.7 per cent, the Abu Dhabi Exchange benchmark declined by 1.5 per cent and the Saudi Tadawul lost 1.7 per cent of its value in a single session.
The local markets were lucky, it seems. For, the fall in international markets was comparatively much steeper. Chinese bourses bore the brunt of Trump's tweets, with the Shanghai Stock Exchange Composite Index plunging by 5.6 per cent in what was its worst single-session drop in more than three years. It was followed by Singapore (down 3 per cent) and the Hong Kong Hang Seng (down 2.9 per cent). The Dow Jones Industrial Average fell 450 points on the opening bell (down 1.7 per cent) while Nasdaq tumbled 2.2 per cent and the S&P 500 fell 1.6 per cent.
Emboldened as he may have been by the recent bump in the US economy, Trump's tweets suggest he's pushing for an early resolution of the talks (he gave Friday, May 10, as the deadline, when the increased tariff kicks in). His tweets came just before Chinese vice premier Liu He is scheduled to travel to the US for those talks. Given that China is trying to nurse its nascent economic recovery back into a full-blown boom, its options to take America's negotiator-in-chief head-on seem limited at this stage. Well-played, Mr Trump.