Commodities Buzz: Trade War between China and US Takes Front Seat

The trade war between two economic powerhouses – the US and China has hampered the world economic growth prospects significantly. Factory growth moderated across the world in July, heightening concerns about the global economic outlook on an intensifying trade conflict between the United States and China. Global economic activity remains solid, but it has already passed its peak and the momentum would largely depend on global trade flows in next few quarters.

However, slowing growth and trade war fears are not likely to deter major central banks moving away from their ultra-loose monetary policies put in place during the last financial crisis. Last month, China and the United States imposed tit-for-tat tariffs on $ 34 billion of each others goods and another round of tariffs on $ 16 billion is expected in August.

US President Donald Trumps administration could further propose 25 percent tariffs on a further $ 200 billion of imports, up from an initial proposal of 10 percent. The threat of tariffs on the entire $ 500 billion or so worth of goods imported from China still stands. China has pledged equal retaliation, although it only imports about $ 130 billion of US goods.