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It has been announced that the previously announced tariff on Chinese goods is postponed from September to December. It has a positive impact on the Dow Jones index.
In a very surprising turn of events, U.S. President Donald Trump has made an interesting indirect decision to temporarily pause the ongoing Sino-U.S. war by postponing the earlier announced tariffs on Chinese imports until December. Reportedly, this was done with the end of the year in mind, to minimize any negative impact the tariff would have on the holiday celebration in the U.S. The news raised positive sentiments for the Dow Jones index and triggered a rally.
“We’re doing this for the Christmas season. Just in case some of the tariffs would have an impact on U.S. customers. So far they’ve had virtually none. But just in case they might have an impact on people, what we’ve done is we’ve delayed it, so that they won’t be relevant to the Christmas shopping season.”
The postponement will benefit a large array of these imports which include laptop computers, cellphones, video games, toys and “certain items of footwear and clothing. The official statement from the United States Trade Representative gave a bit of a different reason from Trump saying that the goods in question are excluded from the tariff “based on health, safety, national security and other factors.”
Stock Markets are Also Benefitting
In the grand scheme of things, not much has changed. There is still considerable anxiety in some quarters, regarding the possibility of an economic recession. Regardless, the Dow Jones and the S&P 500 are experiencing a considerable rally, even if it might be short-lived. Significant improvement has been seen in three major stocks including Apple, Caterpillar and Intel.
Electronics are probably the top of the list of goods which will be seeing some relief until December. This is probably responsible for Apple’s stock also shooting up. Apple already had some reprieve when Trump initially announced the tariffs as some of its products including earbuds and smartwatches would not suffer the tariffs. Apple has also been pushing its share buyback agenda and so far, it has reportedly bought back up to $49 billion in shares for the present fiscal year.
For Caterpillar, it had lost up to 13% since May when it began dropping. However, the news has sent Caterpillar’s stock up by 3%. This is good news for the company who recently had its rating cut by Goldman Sachs due to concerns that it would be hurt by economic problems.
Intel, the computer chip maker, has also suffered a bit from the economic tussle between the U.S. and China. Now, it’s the third-best Dow Jones performer.
Other notable mentions are Best Buy which jumped by 6.5%, Hasbro increasing 2.75% and Mattel which did 4.6%. Nike, Kohl’s and Nordstrom all benefitted from the news of the postponed tariffs as well.