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The threat of a trade war sent world stock markets broadly lower in choppy trading on Friday and boosted safer assets like the yen and government

bonds, a day after U.S. President Donald Trump announced tariffs

on up to $60 billion of Chinese goods.

Trump signed a presidential memorandum on Thursday that could impose tariffs on up to $60 billion of imports from China, although the measures have a 30-day consultation period before they take effect.

After another bruising week, a key gauge of world equity markets was broadly headed for its first quarterly loss since early 2016 as a spike in volatility, rising inflation and the specter of a trade war spooked investors who had enjoyed a

multi-year bull run.

MSCI’s gauge of stocks across the globe shed 1.8 percent. The index lost 3.4 percent this week for its worst week since early February when a spike in volatility had sent markets into a tailspin.

‘Getting clobbered’

“The equity markets are getting clobbered, which is not that surprising with fears of a trade war breaking out,” said Paul Fage, a TD Securities emerging markets strategist.

The losses accelerated near the close of U.S. trading.

The Dow Jones Industrial Average fell 424.69 points, or 1.77 percent, to 23,533.20, the S&P 500 lost 55.43 points, or 2.10 percent, to 2,588.26 and the Nasdaq Composite dropped 174.01 points, or 2.43 percent, to 6,992.67.

The declines sent the Dow and the S&P 500 down more than 4 percent and more than 2.75 percent, respectively, for the year to date.

“There’s a whole lot less predictability in the news flow after this week, and I don’t think that gave investors a lot of confidence going into the weekend ‘long’ (stocks),” said Art Hogan, chief market strategist at B. Riley FBR in New York.

European stocks fell broadly, with the Euro Stoxx index dropping 0.9 percent. That followed large declines in Asia, where the Nikkei tumbled 4.5 percent and the Hang Seng index lost 2.5 percent.

China urged the United States to “pull back from the brink,” but investors fear Trump’s tariffs are leading the world’s two largest economies into a trade war with potentially dire consequences for the global economy.

China disclosed its own plans on Friday to impose tariffs on up to $3 billion of U.S. imports in retaliation against U.S. tariffs on Chinese steel and aluminum products.

Safer assets

Amid the uncertain global economic climate, investors seeking safer assets jumped into government bonds in Europe and the United States.

Benchmark 10-year U.S. Treasury notes last rose 6/32 in price to yield 2.8117 percent, from 2.832 percent late on Thursday.

In Europe, benchmark issuer Germany’s 10-year bond yields hovered close to 10-week lows struck a day earlier at around 0.52 percent. While German bond yields recovered in European trading, they suffered their biggest two-week drop since November.

Many investors also turned to the Japanese yen, a currency likely to benefit from a full-fledged trade war.

The currency gained as much as 0.6 percent against the dollar to 104.635 yen, the first time it has been below 105 since November 2016. Investors later booked profits to leave the yen up 0.1 percent at 105.19 yen per dollar.

The Swiss franc, another currency bought in times of market uncertainty, rose 0.2 percent versus the dollar, although it fell against the euro.

The dollar index, tracking it against other major currencies, fell 0.4 percent.

U.S. crude rose 2.6 percent to $65.97 per barrel and Brent was last at $70.55, up 2.4 percent. 
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Randy Poskin, a soybean farmer in rural Illinois, voted for Donald Trump in the 2016 presidential election. But ask him now he feels about that decision, and you get a tepid response.

“I’m not sure,” Poskin said.

Like many farmers in the Midwest, Poskin is concerned about getting caught in the middle of a trade war, as Trump ramps up economic pressure on China.

Those fears were heightened after Trump announced plans Thursday to impose tariffs on as much as $60 billion worth of Chinese imports.

“I’m fearful they will retaliate on those tariffs,” Poskin said. “Soybean exports, wheat, poultry, chicken, beef — [there are] any number of products that we export to their country that they could retaliate with.”

The announcement has unnerved many in Trump’s base of supporters in U.S. agriculture. The trade tensions have also rattled global markets, which until recently had performed strongly.

Intellectual property theft

Trump’s tariff decision was meant to punish Chinese companies that benefit from unfair access to U.S. technology.

U.S. businesses have long bristled at Beijing’s requirement that they transfer technology to Chinese companies as a condition of entering the Chinese market. U.S. businesses have also had their technology stolen through cyberattacks.

“We have a tremendous intellectual property theft situation going on,” Trump said during the signing ceremony Thursday.

Some U.S. companies in China cheered the move and suggested that concerns about a trade war were overblown.

William Zarit, chairman of the American Chamber of Commerce in China, dismissed the “hair on fire” concern that Trump’s proposed moves would hurt the global economy.

“That the U.S. is willing to risk these disruptions indicates how serious the U.S. administration finds China’s forced technology transfer, cybertheft and discriminatory industrial policies,” he said in a statement to VOA.

Zarit pointed to a recent survey suggesting members of his organization wanted the White House to “advocate more strongly for a level playing field and for reciprocal treatment to improve market access” in China.

But it’s not yet clear whether Trump’s words will translate into that kind of action. That’s in part because the president’s move on Thursday did not actually implement tariffs.

Delayed move

Instead, Trump gave the U.S. trade representative 15 days to identify specific Chinese goods that will be subject to the penalties. There will then be a 30-day window for public comment. That means any move is at least 45 days away.

Trump took a similar approach to steel and aluminum tariffs earlier this month. Although the White House initially leaked news that there would be a universal tax on all steel and aluminum imports, at least six countries and the European Union have since received exemptions.

“You have announcements with a lot of big, very aggressive, very dramatic rhetoric, but when it comes time to actually implement the policy, it’s much more toned down, much more in line with historical U.S. trade enforcement policy,” said Geoffrey Gertz of the Brookings Institution.

Such a negotiating tactic often gets Trump the “tough on trade” headlines that he desires, even while reducing the immediate risk of starting a trade war.

But there are still uncertainties. For instance, it still isn’t clear how China will respond to Trump’s protectionist measures.

China’s response

On Friday, China blasted Trump’s move but did little in the way of countermeasures.

“If somebody imposes a trade war on China, we’ll fight to the end,” Cui Tiankai, the Chinese ambassador to Washington, said on state TV.

China also released a list of potential tariffs on $3 billion worth of U.S. goods, including pork, fruit, wine, steel pipes and other products.

“China responded strong verbally but soft in actual countermeasures,” said Allan Von Mehren, a China analyst at the Copenhagen-based Danske Bank.

“This is a very measured reaction, as $3 billion is a drop in the ocean out of the $131 billion the U.S. exports to China every year,” he said.

However, China has signaled it may impose more significant measures should Trump follow through with his tariffs.

Should China retaliate further, a prime target is soybean farmers like Poskin, who are uniquely vulnerable to Chinese retaliation.

One in every three rows of U.S. soybeans is exported to China, according to the American Soybean Association.

That vulnerability is leaving Poskin to wonder whether he did the right thing in supporting Trump.

“I mean, I do like the regulation side of things, the way he’s backing things off,” Poskin said. “But just the same, these areas of trade are very important to agriculture. We can’t interrupt this.”
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New orders for key U.S.-made capital goods rebounded more than expected in February after two straight monthly declines and shipments surged, which could temper expectations of a sharp slowdown in business spending on equipment in the first quarter.

The Commerce Department’s report on Friday could prompt economists to raise their economic growth estimates for the first three months of the year. They were slashed last week after data showed retail sales fell in February for the third month in a row.

The Federal Reserve on Wednesday painted an upbeat picture of the economy when it raised interest rates and forecast at least two more increases for 2018.

Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, jumped 1.8 percent last month. That was the biggest gain in five months and followed a downwardly revised 0.4 percent decrease in January.

Economists polled by Reuters had forecast those orders rising only 0.8 percent in February after a previously reported 0.3 percent decline in January. Core capital goods orders increased 7.4 percent on a year-on-year basis.

Shipments of core capital goods increased 1.4 percent last month, the biggest advance since December 2016, after an upwardly revised 0.1 percent gain in January. Core capital goods shipments are used to calculate equipment spending in the government’s gross domestic product measurement.

They were previously reported to have slipped 0.1 percent in January. Business spending on equipment powered ahead in 2017 as companies anticipated a hefty reduction in the corporate income tax rate. The Trump administration slashed that rate to 21 percent from 35 percent effective in January.

U.S. financial markets were little moved by the data as investors worried that President Donald Trump’s announcement on Thursday of tariffs on up to $60 billion of Chinese goods could start a global trade war.

Prices of U.S. Treasuries were mixed while U.S. stock index futures were largely flat. The dollar fell against a basket of currencies.

Strong business spending

The surge in core capital goods orders in February suggests further gains. There had been concerns spending could slow sharply after double-digit growth in the past quarters.

Investment in equipment is likely to be bolstered by robust business confidence, strengthening global economic growth and a weakening dollar, which is boosting demand for U.S. exports.

That is helping to support manufacturing, which accounts for about 12 percent of U.S. economic activity.

The strength in core capital goods shipments, together with a surge in industrial production in February, could help offset the impact of soft consumer spending on first-quarter growth.

The Atlanta Federal Reserve is forecasting gross domestic product increasing at a 1.8 percent annualized rate in the first three months of the year.

The government reported last month that the economy grew at a 2.5 percent pace in the fourth quarter. However, revisions to December data on construction spending, factory orders and wholesale inventories have suggested the fourth-quarter growth estimate could be raised to a 3.1 percent pace. The government will publish its third GDP estimate on Wednesday.

Last month, orders for machinery soared 1.6 percent. There were also hefty increases in orders of primary metals and electrical equipment, appliances and components.

Orders for computers and electronic products fell 0.2 percent, with bookings for communications equipment recording their biggest drop since December 2015.

Overall orders for durable goods, items ranging from toasters to aircraft that are meant to last three years or more, vaulted 3.1 percent last month as demand for transportation equipment soared 7.1 percent.

That followed a 3.5 percent tumble in January. Orders for motor vehicles and parts increased 1.6 percent last month after edging up 0.1 percent in January.
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U.S. President Donald Trump on Thursday signed a memo paving the way for major tariffs on Chinese imports. It’s part of Trump’s plan to crack down on China’s theft of intellectual property. But many U.S. farmers are worried the tariffs will prompt China to retaliate against their products. VOA’s Kane Farabaugh and Bill Gallo report on what some fear could be just the start of significant trade friction between Washington and Beijing.
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The White House announced late Thursday which countries will be temporarily exempt from the tariffs on steel and aluminum that go into effect Friday.

Earlier this month, President Donald Trump announced 25 percent tariffs on steel coming into the country and 10 percent tariffs on imported aluminum.

The countries winning the temporary exemptions are Argentina, Australia, Brazil, Canada, Mexico, South Korea and the member countries of the European Union.

Exemptions to be monitored

The White House says it is in ongoing discussions with all the exempted countries and will “closely monitor” their steel and aluminum imports.

The president will decide by May 1 if he will continue the exemptions, “based on the status of discussions” with the countries. The EU will negotiate for its member countries.

Trump said in proclamations issued Thursday night that steel and aluminum articles “are being imported into the United States in such quantities and under such circumstances as to threaten to impair the national security of the United States …”

The administration has said that retaining a domestic steel and aluminum manufacturing capacity is a matter of national security in order to build everything from tanks to rockets, as well as critical infrastructure such as water treatment plants.

Japan said it should also be exempt from the metals tariffs since its steel and aluminum exports do not pose a threat to the national security of the U.S.

“We have repeatedly told the U.S. side that steel and aluminum imports from its ally Japan will not adversely affect America’s national security and that Japan should be excluded,” Yoshihide Suga, Japan’s chief Cabinet secretary said Friday. Japan is the closest ally of the U.S. in Asia.

Opponents of Trump’s action see the tariffs as undermining the rules-based global trading system and using national security disguised as protectionism that will encourage other countries to resort to the same premise to protect their domestic markets.

The White House has rejected that argument, contending that the U.S. “is the freest-trading nation in the world” and arguing that the rules-based trading system, under the 23-year-old World Trade Organization with 164 member states, “is not working very well for the American people.”

TPP replacement signed

Trump announced his plans for the tariffs earlier this month, just hours after 11 other countries formalized, in Chile, a revised agreement that reduces tariffs and cut trade barriers among the member countries.

Known as the Comprehensive and Progressive Agreement (CPTPP), it replaces the Trans-Pacific Partnership (TPP) from which Trump withdrew the United States.

The countries that joined the TPP successor are Australia, Brunei, Canada, Chile, Malaysia, Mexico, Japan, New Zealand, Peru, Singapore and Vietnam.

Trump boasted that trade wars “are good and easy to win” after his surprise announcement to levy the tariffs on the two metals.
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Saudi Arabia opened its airspace for the first time to a commercial flight to Israel with the inauguration Thursday of an Air India route between New Delhi and Tel Aviv.

Air India 139 landed at Tel Aviv’s Ben Gurion Airport after a flight of about 7½ hours, marking a diplomatic shift for Riyadh that Israel says was fueled by shared concern over Iranian influence in the region.

“This is a really historic day that follows two years of very, very intensive work,” Israeli Tourism Minister Yariv Levin said in a radio interview, adding that using Saudi airspace cut travel time to India by around two hours and would reduce ticket prices.

Israel not recognized

Saudi Arabia, birthplace of Islam and home to its holiest shrines, does not recognize Israel.

Riyadh has not formally confirmed granting the Air India plane overflight rights. While the move ended a 70-year-old ban on planes flying to or from Israel through Saudi airspace, there is as yet no indication that it will be applied for any Israeli airline.

The Air India Boeing 787-8 Dreamliner entered Saudi airspace around 1645 GMT (12:45 p.m. EDT) and overflew the kingdom at 40,000 feet for about three hours, coming within 60 km (37 miles) of the capital Riyadh, according to the Flightradar monitoring app. It then crossed over Jordan and the occupied West Bank into Israel.

The airliner had earlier flown over Oman, according to Flightradar. Officials from Oman, which also does not recognize Israel, could not be reached for comment.

El Al sees unfair advantage

Israel’s flag carrier El Al, excluded from the Saudi route, says its Indian competitor now has an unfair advantage.

El Al currently flies four times a week to the Indian city of Mumbai. Those flights take around 7 hours and 40 minutes, following a Red Sea route that swings toward Ethiopia to avoid Saudi airspace.

If El Al planes were to fly on to New Delhi, a destination El Al has said it might be interested in, they would require another two hours, and significantly more fuel.

Interviewed on Israel’s Army Radio, Levin voiced confidence that El Al would eventually be allowed to use Saudi airspace.

“You know, they said the Saudis wouldn’t let any flight pass. So here, the Saudis are permitting it. It is a process, I think. Ultimately this (El Al overflights) will happen too,” he said.

Asked if any other foreign airlines might follow Air India by opening routes to Tel Aviv over Saudi Arabia, Levin said he has been in negotiations with Singapore Airlines and a carrier from the Philippines, which he did not name.

“They are certainly showing readiness and desire to fly to Israel, and I don’t know if they will also receive permission like the Indian airline,” he said.

Singapore Airlines did not immediately reply to a request for comment. Saudi officials could not immediately be reached.
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Toy company executive Isaac Larian says he and other investors have pledged a total of $200 million in financing and hope to raise four times that amount in crowdfunding in order to bid for up to 400 of the Toys R Us stores being liquidated in bankruptcy.

The unsolicited bid still faces many hurdles, including finding other deep-pocked investors and getting a bankruptcy judge to agree to it. But this is the first public plan to keep the cherished toy brand in existence in the United States.

Such a long-shot move would also greatly benefit Larian’s primary business. He’s CEO of Bratz doll-maker MGA Entertainment, which relies on Toys R Us for nearly 1 in every 5 sales.

​Good for the industry

Larian says he and the other investors, which he declined to name, believe salvaging part of the Toys R Us business will be good for the toy industry, customers and workers. They’re interested in more than half the 735 U.S. stores Toys R Us plans to liquidate, and want to be able to use the valuable brand name.

And they’re hoping the outpouring of affectionate nostalgia when Toys R Us announced its plans — #SaveToysRUs has been a trend on social media — translates into pledges toward their $1 billion goal.

Toys R Us sought court approval last week to liquidate its remaining U.S. stores, threatening the jobs of about 30,000 employees and spelling the end for a chain known to generations of children and parents for its sprawling stores, sing-along jingle and Geoffrey the giraffe mascot.

The store has an iconic place in American culture, said Larian. “We can’t just sit back and just let it disappear.” Larian, who is a billionaire, is using his own money, not MGA funds, for the bid.

No debt

Why might Larian be successful with a retail chain struggling to stay relevant in the age of Amazon? For one thing, Larian wouldn’t have the massive $5 billion in debt that hampered the current owner of Toys R Us. He also says the toy industry needs a big chain like Toys R Us, where children can touch and feel the toys and toymaker’s can test new products.

The chain’s liquidation will have a “devastating effect” on the toy industry, said Larian, who estimates that 130,000 jobs in the U.S. could be lost when you include layoffs at suppliers and logistic operations. He said a total Toys R Us liquidation could mean MGA would have to lay off workers at an Ohio plant that makes the Little Tikes toy vehicles. That brand accounts for 25 percent of MGA total sales, and Larian says only Toys R Us really had enough room to display the cars. It’s harder to ship such bulky items on Amazon.

The Toys R Us troubles have hurt big toy makers like Mattel and Hasbro, which have been key suppliers to the chain. MGA, based in Van Nuys, California, is the world’s largest privately held toy company. The planned liquidation would have a bigger impact on smaller toy makers that rely more on the chain for sales.
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A little more than 40 hours after leaving Moscow’s Yaroslavsky station, the Vorkuta Express pulled into its terminus after a 2,000-kilometer journey through the taiga forests and tundra of Russia’s far north. The city lies 150 kilometers inside the Arctic Circle, seemingly at the edge of human habitation.

Its monochrome extremes overwhelm the senses: vast Arctic ice fields punctured with the scars of creaking coal mines.

The city is dying. The fall of the Soviet Union left Vorkuta vulnerable to market forces. In the 1990s, eight of the 13 coal mines closed, and two-thirds of the residents have left in the past 30 years. In 2016, a series of explosions in one of the largest mines killed 36 people and dealt another blow to Vorkuta’s future.

WATCH: In Russia’s Dying Arctic City, Residents Plea for Putin to Offer Lifeline

Largely cut off from the rest of Russia, 70,000 people remain in the decaying city. Amid the decline, Nadezhda Kozhevnikova is trying to run a clothing store. She said Vorkuta has been forgotten.

“As far as I understand, we have enough coal reserves for another 50 years. There is demand for coal. So, why are mines not being set up? None are being developed. Nothing is being done,” Kozhevnikova said.

Politics haven’t helped

And yet, few Vorkuta residents voted for change. Seventy-three percent backed President Vladimir Putin’s United Russia Party in an election Sunday that international observers said was neither free nor fair.

As his students practiced on miniaturized drills and machinery, Victor Telnov wasn’t interested in debating democracy. As director of the Vorkuta College of Mining and Economics, he’s teaching the next generation the skills that will be vital to Vorkuta’s survival. He said Russians must put their faith in Putin.

“As a well-known public figure recently said, ‘Do not have any illusions. This time, we do not elect a president, but a commander-in-chief.’ This election is emblematic, for Russia and for the world community. We show how much we are united as Russians.”

​Built by Stalin’s gulag labor

Vorkuta rose from the ice-bound wastelands in the 1930s, built by the forced labor of Josef Stalin’s gulags. Up to 200,000 political prisoners are buried in the permafrost. Gulag prisoners also built the railway, Vorkuta’s only land link with the outside world. The small airport is often closed because of the weather.

Deep beneath the ice, Anatoly Vorobyov and his colleagues mine the same seams of coal that once powered the Soviet Union. He has a short wish list for Putin.

“At the very least, I hope the current standards will be preserved — wage stability, a steady supply of workers who are given everything they need. I mean a social package and all that,” Vorobyov said. “As an improvement, we would certainly like a salary increase. And maybe a new highway to Vorkuta. That would be cool for all the residents.”

A craving for stability, and yet a longing for a faster escape route from this decaying town.

In the 1990s, miners’ wages in Vorkuta went unpaid for 10 months. Memories of that trauma are frozen in the minds of many voters. Life in Vorkuta may seem bleak under Putin’s Russia, but the people here know it could get a lot worse.
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About 150 kilometers inside the Arctic Circle lies the Russian city of Vorkuta, a mining outpost that is rapidly being reclaimed by the elements. Many residents abandoned the city after the fall of the Soviet Union, but 70,000 people remain, largely cut off from the rest of Russia, seemingly trapped in a decaying city. Henry Ridgwell reports on the challenges facing this remote icebound settlement, far beyond the bright lights and billionaire mansions of Moscow.
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