The ASX share market has jumped in response to US President Trump deciding to lessen the tariff blow to most of the world. The S&P/ASX 200 Index (ASX: XJO) is currently up by 5%.
Trump’s latest tariff decision
According to reporting by various media, including the BBC, Trump has decided to not implement high tariffs on numerous countries.
US President Trump decided to reduce the new tariff rate on imports into the US to 10% for 90 days. This will give those countries time to negotiate trade deals.
However, he has also decided to raise the import tariff on China to 125% immediately. He said this was because of the “lack of respect that China has shown to the World’s Markets.”
When asked about the decision to essentially back down, Trump said to reporters:
Well, I thought that people were jumping a little bit out of line. They were getting yippy, you know, they were getting a little bit yippy, a little bit afraid.
The US Treasury Secretary Scott Bessett reportedly said to reporters that Trump had always intended to put back off with the initial tariffs.
While it’s positive the stock market has jumped in response, with the S&P 500 up 9.5% and the NASDAQ up 12.2%, tariffs for countries like Australia and the UK haven’t changed, and the Chinese tariffs have increased again. The US-China trade relationship is one of the most important in the world.
What to make of this for ASX shares
It seems a positive for confidence but plenty of ASX companies are still in the same situation – most Australian exports to the US are still getting a 10% tariff and goods manufactured in China (which some ASX shares utilise) are getting an enormous tariff.
With how much Australian relies on the Chinese economy to buy certain items (including significant resource purchases), the heavy tariffs on China could mean the overnight announcement could be a net negative for Australia.
When will the escalating tariffs between China and US stop? That could be key for influencing how the ASX share market goes from here.
Regardless, I think lower share prices are a good time to invest and there are still opportunities out there, even if they’re higher than yesterday.
