Market Analysts are urging US President Donald Trump to rollback tariffs on Chinese imports as the fatal coronavirus ravages China’s economy with multiple international firms suspending operations in the country and Asian markets plunging on Thursday.
Taiwan’s Taiex dropped 3.73 percent on the first day of trade after the Lunar New Year. South Korea’s Kospi fell 0.41 percent while Japan’s Nikkei 225 plunged 0.86 percent.
While the US-China Phase One trade deal this month paused open hostilities, the US has yet to rollback any tariffs put in place last year and Trump has stated rollbacks wouldn’t start until Phase Two negotiations began.
“We’re leaving tariffs on, but I will agree to take those tariffs off if we are able to do ‘phase two,’” said Trump at the time.
However, as the coronavirus infection rate explodes in China with nearly 8,000 people infected worldwide and 170 deaths already accounted for, large multi-nationals are beginning to suspend their operations in the country.
Internationals airline have begun to suspend flights to China, most notably UK-based British Airline who has completely stopped flight service to the country. International fast food giant McDonald’s shut down operations in all its restaurants in the Chinese province in Hubei, the center of the viral infection outbreak.
The US government’s top trade advisor Peter Navarro argued that rolling back tariffs wouldn’t be up for discussion even as the coronavirus debilitates the Chinese economy.
“That’s a spin that’s coming right out of Wall Street, and it really, I think, it does a disservice to this whole crisis to bring that into the discussion,” said Navarro on US TV.
“Let’s remember why the tariffs are in place,” said Navaro.
“The tariffs are in place because China engages in massive unfair subsidies,” added Navarro. “They use their state-owned enterprises to put American companies and workers out of business and the tariffs also ensure that we come back for phase two.”
Analyst believed the global economy to be headed for a rebound in 2020 but the viral outbreak has worried investors about the possible ramifications that may slow down global growth.
“The Wuhan coronavirus poses a significant downside risk to the near-term Asia-Pacific economic outlook in 2020 if the epidemic continues to escalate in coming weeks,” stated Rajiv Biswas, Asia Pacific Chief Economist at IHS Markit, in a report.
“The extent and duration of this negative shock to regional economic growth will depend on how quickly the Wuhan virus epidemic can be brought under control,” he added.