Though it seemed like only last week an end to the trade war between the U.S. and China was eminent, it now seems like a deal may not be on the horizon – and investors are exhibiting their concerns with broad selloffs. All major Asian benchmarks were trading lower on Thursday afternoon in Asia, prompted by reports out on Wednesday that the U.S. administration was mulling sanctions on Chinese video surveillance firm Hikvision, like the sanctions that they’ve already placed on Huawei, one of China’s biggest technology companies. The sanctions against Chinese technology companies is, for all intents and purposes, being passed off as a security measure, though some question the validity of these claims and argue that U.S. President Donald Trump is grasping at straws, looking for any way to put stress on China’s economy so that Beijing will yield to the U.S.’s trade demands.
The steepest declines on Thursday were seen in China, where the Shenzhen Composite slumped 1.48 percent and the Shanghai Composite eased 0.84 percent. Hong Kong’s Hang Seng Index lost 1.30 percent while Japan’s Nikkei 225 lost 0.68 percent. The declines in Asia followed a down day on Wall Street where all three major benchmark indexes closed lower.
According to Reuters, some analysts are expecting the trade war to escalate further and for the tariffs to remain in effect until the end of 2020. On Wednesday, U.S. Treasury Secretary Steven Mnuchin announced that it would be at least one month before the recently announced tariffs on a further $300 billion of Chinese goods would go into effect. CNBC analysts have also highlighted their concern that global markets, and specifically U.S. markets, could continue face high volatility due to President Trump’s his habit of sharing controversial public policy ideas on Twitter, which make the market move instantly, even if the policy isn’t immediately enacted. In December 2018, for example, Trump tweeted that he is a “tariff man,” and the markets reacted quickly and violently, with the Dow Jones Industrial Average falling by 799 points in that one day.