Treasury Secretary Scott Bessent suggested yesterday that the US and China were in dispute over critical minerals. Bessent told CBS’s “Face the Nation”: “What China is doing is they are holding back products that are essential for the industrial supply chains of India, of Europe. And that is not what a reliable partner does.” Share prices in China have weakened today, pulling the CSI 300 share index down by 0.5%. Hong Kong’s Hang Seng index has slid by 1.5%. In Japan, the Topix share index has lost 0.9%. Jim Reid, market strategist at Deutsche Bank, points out that “it’s hard to see past trade at the moment,” adding: It is really hard to keep up or predict what’s going to happen on trade at the moment, and that’s before we factor in the full ramifications from the court ruling last Thursday night, and then subsequent brief stay of execution for them on appeal. For now it seems likely that the tariff uncertainty will linger for a long time ahead even if we’re still likely past the peak aggressiveness of US policy. Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy. Trade war tensions are on the rise again, as relations between China and the US deteriorate. Beijing has hit back this morning against Washington, accusing the US of “seriously violating” the trade truce which the two powers agreed in Zurich last month. China’s commerce ministry also promised to take forceful measures to safeguard its interests, rejecting a claim from Donald Trump last week that China has ‘totally violated’ its trade agreement with the US. In a statement, the ministry said: “The U.S. government has unilaterally and repeatedly provoked new economic and trade frictions, exacerbating uncertainty and instability in bilateral economic and trade relations.” Beijing accused the US of unilaterally introducing new discriminatory restrictions, including new guidelines on AI chip export controls, curbs on chip design software sales to China and the revocation of Chinese student visas, Bloomberg reports. Stock markets across the Asia-Pacific region have dropped today, as investors fret that the détente between the two sides is fraying. Last Friday, the US president – perhaps stung by jibes that Trump Always Chickens Out – declared that China “HAS TOTALLY VIOLATED ITS AGREEMENT WITH US.”, raising fears that the trade war will continue to rattle the global economy. This latest uncertainty is hurting the US dollar. It has slipped against a basket of currencies, with the pound up almost half a cent at $1.35, and the euro gaining a third of a cent to $1.138. The legality of Trump’s trade war was also thown into doubt last week, when a US federal court ruled that his “liberation day” tariff plan is illegal, only for a federal appeals court to temporarily reinstate the tariffs while the case progresses. The agenda 9am BST: Eurozone manufacturing PMI for May 9.30am BST: UK manufacturing PMI for May 9.30am BST: Bank of England mortgage approvals and credit conditions data 3pm BST: US manufacturing PMI for May
Author: Graeme Wearden