President Trump announced new tariffs on $200 billion of Chinese goods after the US close this morning. This brings the total to $250 billion, representing almost half of all imports from China. The tariffs kick in at 10% initially, increasing to 25% next year. China is expected to respond quickly. The US dollar is up, stocks futures are down and the inflationary aspects of the move will likely ratchet higher the current pressure on bond markets.

First blush reactions could see selling in Asia Pacific share markets today. However lower local currencies and the certainty offered now that the tariffs are a known rather than a threat may see a relief rally at some stage during today’s trading.

While the first round of US tariffs hit mainly industrial goods the latest round is much more consumer targeted. Some tech goods have escaped, including Apple Watches and Fitbits. In any normal circumstances an inflationary move that puts a brake on growth would be an unambiguous negative. However given many economies face inflation that is too low there could be a more nuanced impact on investor thinking.

The Hong Kong 50 index is the most affected in the lead up to this announcement, and may act as a good guide to local market reactions. The Australian, Singapore and New Zealand dollars are down modestly in response, possibly reflecting already lower positioning.