US Oil and Futures Drop After China Tariffs Take Effect – Asia Market Wrap

Stock futures and oil prices fell as China retaliated to fresh US tariffs, resuming a trade war between the world’s two largest economies.

S&P 500 futures dipped 0.2%, while Nasdaq 100 contracts slid 0.3%, wiping off earlier gains based on hopes of a deal to suspend the levies. On Monday, Trump decided to postpone placing tariffs on Canada and Mexico. A index of Chinese stocks traded in Hong Kong, which had risen over 4% earlier, had reduced its gain to 0.8%.

In an apparent retaliatory move, China opened an investigation into Google and imposed new duties on a number of US imports shortly after the 10% tariffs kicked in.

Trump’s decision to postpone placing tariffs on Mexico and Canada helped reverse Monday’s risk-off attitude, and investors were banking on a phone call between China and the US to resolve taxes on Asia’s largest economy. The deferral of tariffs on North American economies strengthened the perception that Trump regards tariffs as a negotiation tactic, but is still hesitant to impose economic damage on Americans.

Trump had stated that his government planned to communicate with China, boosting the prospect of a 10% tariff respite.