Breaking: Trump retaliates to Chinese tariffs by announcing fresh tariffs on Chinese products

In retaliation to the earlier news that China will impose 5% to 10% tariffs on $75 billion of goods (including frozen pork and nuts) along with resuming the 25% duty on US automobiles and auto parts from 15th December, Trump has struck back in the latest round of trade wars - neatly timed after the stock market close which will likely make for a blood bath open next week - (more on that below).

Here is the announcement made by Trump on Twitter:

For many years China (and many other countries) has been taking advantage of the United States on Trade, Intellectual Property Theft, and much more. Our Country has been losing HUNDREDS OF BILLIONS OF DOLLARS a year to China, with no end in sight Sadly, past Administrations have allowed China to get so far ahead of Fair and Balanced Trade that it has become a great burden to the American Taxpayer. As President, I can no longer allow this to happen! In the spirit of achieving Fair Trade, we must Balance this very unfair Trading Relationship. China should not have put new Tariffs on 75 BILLION DOLLARS of United States product (politically motivated!). Starting on October 1st, the 250 BILLION DOLLARS of goods and products from China, currently being taxed at 25%, will be taxed at 30% Additionally, the remaining 300 BILLION DOLLARS of goods and products from China, that was being taxed from September 1st at 10%, will now be taxed at 15%. Thank you for your attention to this matter!

It was supposed to be all about the Jackson Hole today, with Powell delivering a speech which has left the door open to a rate cut in September. However, the markets were not prepared for the Chinse announcements where some tariffs will come into effect as soon as 1 September while others will kick in around 15 December. Indeed, this tariff retaliation from China was an utter surprise to many given that China did not immediately react to the 10% US tariffs on $ 300 billion goods and President Trump's unexpected tariff delays to 15 December -  The sudden surprise element of it all will cause a risk-off to asset markets globally which makes for a treacherous Asian open next week.

FX implications:

FX will be trading in a feedback loop to what goes down in the global equity markets - (US stocks ended in a blood bath on Friday on the news). The Yen and CHF will likely be underpinned as the go-to place for investors and gold prices are likely to break down the doors of the resistance line through the 1535s which has capped the precious metal in July and August so far. The Aussie, already tainted by a dovish Reserve Bank of Australia which trades as a proxy to China's geopolitical business will likely be pressured below the August trendline support in the 0.6730s opening the case for a breakout into the lower levels of the 0.60s renewing a bearish case again for the FX space's risk barometer - AUD/JPY.