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Trump is turning a trade skirmish into a trade war with tariffs on US$200 billion more goods

This morning it was announced that President Trump is adding tariffs onto an additional US$200 billion of Chinese goods.

Economists were describing the previous moves as a trade skirmish, but this is turning more into a war the longer and deeper it goes.

Nearly 6,000 products will be affected by this latest round of tariff tag. President Trump said “We have been very clear about the type of changes that need to be made, and we have given China every opportunity to treat us more fairly. But, so far, China has been unwilling to change its practices.”

President Trump isn’t messing around. He also threatened that the USA would impose tariffs on another US$267 billion worth of Chinese goods if China retaliated. If that occurred, essentially everything that China exports to the USA would be tariffed.

Some items in this round includes handbags, rice, textiles, suitcases, toilet paper, frozen fish, fruit and cereal.

The Australian market is likely to suffer due to Australia’s economic dependence on China. In early trade BHP Billiton Limited (ASX: BHP) is down 1.1%, Brambles Limited (ASX: BXB) is down 0.8% and Amcor Limited (ASX: AMC) is down 0.7%.

I’m sure that Asian markets will also trend downwards today, meaning investors interested in emerging markets could be able to snap up a bargain if this blows over quickly.

I wouldn’t surprised if the US dollar strengthens as investors seek a safe haven from potential ‘danger’.

Foolish takeaway

Whatever Donald Trump does, I’m sure the effects won’t last long. In-fact, I don’t worry about the global economy or whole share markets at all. I just look at individual quality businesses.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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