Options Market Suggests China Has Edge in Trade War
Recent changes in prices suggest traders believe Trump may have picked a trade fight he has a diminishing chance of winning.
Wall Street is placing bets on who will win the trade wars.
Photographer: Bloomberg
U.S. President Donald Trump under-estimated China President Xi Jinping’s resolve when he raised tariffs on about $200 billion of imports from China to 25 percent from 10 percent, warning his counterpart not to respond in kind. That advice was ignored.
Trump’s action and China’s response – imposing duties on about $60 billion of U.S. exports to take the total of affected products to $110 billion – led to a 2.41 percent slide in the S&P 500 on May 13, the biggest drop in the index since Jan. 3. In combination with a drop in the yield on 10-year Treasuries to about their lowest since 2017, the clear conclusion is that investors are nervous about the impact that the latest tit-for-tat salvos in the long-running trade dispute will have on U.S. economic growth.