LAUNCESTON, Australia, Aug 2 (Reuters) – The Phoney War stage of U.S. President Donald Trump’s trade dispute with China may be ending, with economic indicators and commodity flows and prices starting to show real world effects.
The latest signal that China’s economy may be feeling some pain associated with Trump’s tariffs on about $34 billion in Chinese goods was the softening of the Purchasing Managers’ Index (PMI) in July.
While the overall drop to 50.8 in July from June’s 51.0 was small, of bigger concern was the slump in the subindex for new export orders, which dropped to 48.4, a fourth consecutive monthly decline.
The drop in the PMI, a key indicator of manufacturing health in the world’s second-largest economy, came as Trump’s administration proposed a 25 percent tariff on another $200 billion in Chinese goods, up from an earlier 10 percent plan.
U.S. Trade Representative Robert Lighthizer said in a statement on Wednesday that Trump directed the increase from the previously proposed duty because China has refused to meet U.S. demands and imposed retaliatory tariffs on U.S. goods.