China’s Response

• China said it will be forced to retaliate to the new tariffs, though the government didn’t immediately specify how.
• The first step was to bolster the local stock market, where the tariff escalation was met with a strong rally. The Shanghai Composite Index ended the session 3.1% higher after buying by state funds.
• Other options open to the country include a devaluation of the yuan, halting purchases of U.S. soybeans, and the nuclear option: Dumping Treasuries.

(Source: Bloomberg)