Weekly house view | Trump China tariff threat 2.0
The week in review
US equities retreated after President Trump threatened to impose additional 100% tariffs on all Chinese imports from 1 November. Trump’s latest tariff salvo was a response to China's strict new restrictions on rare earth exports. Diplomatic relations soured further as Trump dismissed the need for talks with President Xi Jinping later this month. Meanwhile, the US government shutdown enters its second week, with 750,000 federal workers furloughed and a looming 15 October deadline for US military payments. In Europe, France reappointed Sébastien Lecornu as prime minister, aiming for a 2026 budget with a deficit target just under 5%. Japan postponed its parliamentary session to elect a new prime minister until 20 October at the earliest, after coalition tensions. In the Middle East, Israel and Hamas agreed to a US-brokered ceasefire, ending a two-year conflict in Gaza.
Quote of the week
“Don’t worry about China, it will all be fine! Highly respected President Xi just had a bad moment”, Trump wrote in a social media post. “He doesn’t want Depression for his country, and neither do I. The U.S.A. wants to help China, not hurt it!!!"
Key data
Retail investors bought a record USD 100bn in US equities last month, even as labour-market sentiment weakened. The job openings-to-unemployed ratio hit a cycle low, with a New York Fed survey highlighting hiring challenges, especially for young workers. US retail prices rose further following new tariffs on imports of lumber and furniture. In Europe, German industrial production fell by 4.3% month-on-month, the sharpest drop since March 2022, with auto output down 18.5%.