Asian shares were broadly lower on Monday, succumbing to another day of selloffs as traders continued to worry about the possibility of a trade war between the United States and China. The pressure was renewed after U.S. President Donald Trump proposed a tariff on Chinese goods that would be in addition to the import taxes on steel and aluminum that were proposed earlier. A negative reaction came almost immediately from China, with threats of targeting 128 U.S. products with a value of $3 billion, if the tariffs are imposed. Among the products, Beijing threatened to target are wine, fruit, steel pipes and ginseng, which could face anywhere from a 15 percent tax to a 25 percent tax.
South Korea’s Kospi was up 0.54 percent on news that President Trump would exempt South Korea from the steel tariffs, opting instead for a quota on steel imports from South Korea, as part of a wider trade agreement between the countries. Most other indexes were lower, however, with the Shanghai Composite down 1.69 percent as of 2:18 p.m. HK/SIN, and Australia’s ASX 200 down 0.52 percent.
Nobel-prize willing economist Robert Shiller weighed in on the possibility of an economic crisis resulting from the potential trade war, calling President Trump a “showman” who acts in a way that’s “totally unbecoming for a president.”
Shiller predicted that if a full-blown trade war erupts, there will be absolute chaos in the global economy and that the American economy could enter a recession if the situation isn’t handled properly. Shiller attributed President Trump’s actions to his desire to remain in the spotlight by creating pressing news stories, more than his desire to protect the U.S. economy.
“I think he’s a showman who is doing this for political reasons within the U.S.,” CNBC quoted Shiller as saying, identifying the upcoming midterm elections and Trump’s own attempt to get re-elected in 2020 as factors underpinning his decisions.