U.S. President Donald Trump’s executive order that prevents U.S. companies from using foreign telecoms companies resulted in the Asian markets falling Thursday. The decision also intensified the trade dispute between the world’s two largest economies.
Trump’s move was based on national security grounds. The U.S. has since shown concerns that China’s Huawei equipment could be used to spy other companies and countries. Australia, New Zealand, Japan, and Taiwan join the U.S. in banning Huawei’s products within their mobile networks. Trump’s administration has warned its allies that building next-generation 5G mobile networks using Chinese equipment will result in restrictions on sharing of information with the U.S.
The order only adds fuel to an already tense trade war between the United States and China. Last week, Trump raised tariffs on Chinese goods worth $200 billion to 25% from the initial proposal of 10%. China retaliated by imposing 5% to 10% duties on U.S. goods worth $60 billion. Prior to this, many market analysts believed that the two could strike a deal as early as last week.
“Earlier, the US Commerce Department had added Huawei to a list of entities that prohibits them from acquiring US-made technology and components without a government licence,” said OANDA senior market analyst Jeffrey Halley. “If that’s not an escalation in trade tensions, then I don’t know what is,” Halley added.
Asian Markets Dropped
Hong Kong lost 0.3 percent on Thursday’s early trade. Chinese telecoms company ZTE saw its shares falling by 4 percent. Shanghai and Tokyo were down 0.2 percent and 0.6 percent, respectively. Manila sank 0.8 percent, while Singapore lost 0.3 percent. Seoul also dropped 0.7 percent.
Trade talks with Beijing will continue, US Treasury Secretary Steven Mnuchin said. U.S. officials will meet their Chinese counterparts to pursue a deal.
