The standstill between the U.S. and China showed signs of easing. China said on May 2 that it is assessing U.S. proposals for tariff negotiations. However, China also wanted the White House to show sincerity.
China sent delegates to the U.S. They have headwinds of a 145% tariff on imported Chinese goods to start with. China responded by imposing retaliatory tariffs at 125%. Since then, Chinese ETFs like KWEB, ASHR, and FXP performed well. China’s offshore yuan also strengthened, holding the 7.3 level against the U.S. dollar (DXY).
U.S. Manufacturing
The U.S. has too much debt. The cost of servicing it is unsustainable. The country needs to rebuild its manufacturing capacity to change its path. Even though the stock markets want the trade war to end, a quick resolution is not likely.
China quietly exempted many U.S.-made goods from its 125% tariffs last week. According to Bloomberg, China applied the exemption on goods worth around $40 billion in imports. This would alleviate the impact of the trade war on the Chinese economy. The list included U.S. products of pharmaceuticals and industrial chemicals.
Specialty chemical firms like Chemours (CC) and LyondellBasell (LYB) bounced back. Drug firms like Merck (MRK), Pfizer (PFE), and Bristol-Myers (BMY) also recovered on the stock markets recently.
