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The world’s manufacturing powerhouses sent a simple message on Monday: They’re in the doldrums and could be there for a while.
A day after the US and China put more tariffs on each other, key gauges for activity in August across Asia and Europe confirmed the trade war’s deepening bite.
Manufacturing purchasing manager indexes for Japan, South Korea and Taiwan remained in negative territory. India’s factory gauge slid to its weakest in more than a year. Indonesia’s slipped to its lowest since July 2017 and the Philippines, Thailand, and Myanmar all expanded more slowly. Figures for the euro-area, U.K. and South Africa are similarly bleak.
While China’s Caixin Media and IHS Markit PMI stayed in expansion mode, the nation’s official manufacturing PMI dropped to 49.5, according to data released Saturday. Bloomberg Economics Chang Shu noted that gauges on demand and business sentiment in China point at further weakness.
Not everything can be blamed on the US-China conflict:
- South Korean exports, a bellwether for world trade, slumped in August for a ninth straight month.
- A cooling technology boom and generally weaker global demand is also at play.
- Idiosyncratic issues such as a feud between Japan and Korea aren’t helping.
- An October 31 deadline for a possible hard Brexit is souring sentiment in Europe.
- And there’s still the threat of U.S. tariffs on auto imports, that would hurt Germany in particular.
Looking ahead, the dogfight between the world’s two biggest economies looks to make matters worse.
Since the Trump administration put tariffs on roughly $110 billion in Chinese imports on Sunday, commentaries in Chinese state media shrugged off the move and focused on the pain that U.S. consumers are likely to feel.
The new levies are "a turning point in the trade war" with the US, according to an editorial in the Communist Party’s tabloid Global Times. The report said the tariffs on daily goods are to hit US consumers directly, and it also showed Washington is almost at the end of its wits.
"he Trump administration has shot Americans in the foot. When more and more Americans feel the pain, maybe it will be time for Washington to recover rationality," the editorial said.
Charting the trade war
A 15% tariff that went into effect September 1 on about $112bn of goods imported from China will start pushing up prices of clothing, shoes and other consumer goods arriving at US ports this week.
