US President Trump: Possible he could close more Chinese diplomatic sites

The US President Donald Trump said that it is possible that he could close more Chinse diplomatic sites.

Tensions between China and the United States have reached the most acute levels since the US President called out China in a name blaming over the coronavirus back on April and in an official address that took place during the Hong Kong executive order announcements. 

The American government’s ordering that China close its Houston consulate has rustled the teachers of the Chinese and is likely to flare up trade war tensions again in the latest escapade from the US administration..

The administration is even weighing a blanket ban on travel to the United States by the 92 million members of China’s ruling Communist Party and the possible expulsion of any members currently in the country, an action that would likely invite retaliation against American travel and residency in China,

The New York Times reported, citing additional comments from Orville Schell, director of the Center on US-China Relations at the Asia Society:

“I think we’re in a dangerous and precipitous spiral downward, not without cause, but without the proper diplomatic skills to arrest it,” said Orville Schell, director of the Center on US-China Relations at the Asia Society. The severity of the confrontation, he said, “has jumped the wall from specific and solvable challenges to a clash of systems and values.”

Market implications

Meanwhile, US markets have shrugged off the threat of heightened trade war dramas and Wall Streets benchmarks continued on the bid. 

Gold, on the other hand, is benefitting from safe-haven flows as well as hedging across portfolios as investors prepare for lower real yields. 

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On the other hand, trade wars had been a bullish factor for the US dollar in 2018.

As other nations set out to devalue their currencies, namely the euro and yuan, at which can be done at a far greater pace than the US can devalue the US dollar, the US spiked and maintained a bid, much to the displeasure of the US administration at the time. 

In the midst of tariff announcements from both sides of the US/Sino trade spat, the People's Bank of China set the reference rate for the yuan renminbi (CNY, RNB) to 6.7671 CNY to the United States dollar (USD).

Trump expressed his view in a 20 July 2018 Tweet:

"China, the EU and others have been manipulating their currencies and interest rates lower, while the US is raising rates and the USD gets stronger — taking away our big competitive edge. As usual, not a level playing field..."

Markets will no doubt be taking note of these types of risks again on the escalation of the dispute.