Trump’s administration intends to impose tariffs amounting to at least US$50 billion on imports from China, mainly products coming from sectors such as aerospace, information and communication technology and machinery in order to further address the US$375 billion trade deficit with China. The ongoing trade war dragged Dow Jones Industrial Average (DJIA) down by 723.42 points in a single trading day, closing at 23,957.89 on 22 March 2018, marking the second biggest single-day point drop in this year.

Federal Reserve has lifted the benchmark interest rate for the first time this year, by a quarter point from 1.5 percent to 1.75 percent. US 10-year Treasury bond yield sank by 7 basis point to 2.83 percent, as investors were expecting the stronger economic growth would prompt Jerome Powell to signal a fourth rate hike this year but Fed stuck to its initial forecast of three rate hikes for 2018.

In the event that an agreement could not be met with United States, China plans to retaliate against Trump’s trade tariffs with a proposed list of 128 US goods with import value of US$3 billion that sees a 15 percent duty on items such as wine, fruit and nuts with a further 25 percent duty imposed on pork and aluminum.

In Asia, Hang Seng Index closed at 31,057.67 points on 22 March 2018 – a 1.09 percent decline mainly due to a 5 percent decrease in the share price of Tencent Holdings, one of its top performers this year. Similarly, the Shanghai Composite Index shed 0.53 percent to close at 3,263.48 points on the same day. However, Japan’s Nikkei 225 gained 1 percent to close at 21,591.99 on the same day as well.

Bearing the effects of US interest rate hike and threat of trade war, the Straits Times Index (STI) slipped by 0.56 percent to close at 3,491.37 on 22 March 2018. Economists raised Singapore’s 2018 economic growth forecast expecting growth of 3.2 percent while they warned that the trade war remains the biggest downside risk for Singapore’s economy.

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