Super boost for Aussies as China reaches out after Trump's latest tax attack
Retirees could soon breathe a little easier as the Australian Stock Exchange (ASX) and the dollar are tipped to rise following a turbulent week. Donald Trump has announced a 90-day pause on his tariff plans for more than 75 countries.
That's all countries except China. Trump stepped up his 104 per cent tariff on the Asian superpower to 125 per cent, prompting the Chinese government to offer Australia to "join hands" in a bid boost global trade.
China's ambassador to Australia Xiao Qian said Trump had "weaponised" trade issues after global economies were rocked this week, including the ASX which took a multi-billion dollar plunge.
The impacts were felt by everyday Australians concerned as their superannuation balances dropped and the Aussie dollar fell to its lowest level since the pandemic.
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A poll of nearly 2,000 Yahoo Finance readers found the volatility caused 72 per cent to worry about their nest eggs.
'A weak compromise will only allow the US to sabotage the international order and rules even more wantonly, dragging the world economy, which has already embarked on the track of a stable recovery, into a quagmire and an abyss,' Xiao told the Sydney Morning Herald.
However, the US President's pause has seen a surge in American markets, and investors are predicting similar movements in Australia.
The ASX Futures are financial contracts that allow traders and investors to speculate on what the ASX 200 will do when the bell opens at 10am AEST.
The number is based on overnight trading from the US and other big markets.
The S&P500 lifted 9.52 per cent overnight, the biggest one-day gain since 2008 and third-highest since World War II. The NASDAQ also closed up more than 12 per cent.
Investors are predicting the ASX will see a similar rally on Thursday when the market opens.The ASX lost tens of billions of dollars on Monday and Wednesday as investors were spooked about how the US tariffs would affect our economy.
Opposition leader Peter Dutton even feared Australia would be dragged into a recession as a result.
The benchmark ASX 200 closed 135 points, or 1.8 per cent lower on Wednesday at 7,375.00.
For comparison, the ASX was at 7,859 on Friday.
The Futures suggest the ASX could surge by 490 points, or 6.62 per cent, to 7,895.
The Aussie dollar, which had been dipping below 60 US cents this week, is also expected to jump 3.3 per cent to 61.59 US cents.
Millions of people will have their superannuation invested in the ASX as well as US markets.
When local or international share markets take a tumble, retirement nest eggs can be impacted, particularly for those hoping to leave work and tap their superannuation in the near future.
H&R Block tax expert Mark Chapman told Yahoo Finance the turbulent week on the stock market was confronting for those about to retire.
"Unless there is a rapid uptick in the stock market, this could mean that many people will have to work longer to afford the kind of retirement they thought they were looking at just a few weeks ago," he said.
However, if the Futures are correct and there is a surge on the ASX, those fears could be abated - for now.
The US president's reciprocal tariff pause has been applied to dozens of countries for the next three months.
Some of the tariffs came into effect on Monday, but many were applied on Wednesday, meaning the U-turn was an 11th-hour reversal.
It brings all the affected countries down to 10 per cent as the Trump administration negotiates with each one on future trading agreements.
'People were getting yippy,' Trump said of the pause.
'They all want to make a deal – somebody had to do what we did, and I did a 90-day pause for the people that didn't retaliate, because they told them, 'If you retaliate, we double it'."
Unfortunately for Australia, it was only on a 10 per cent reciprocal tariff to begin with, so there won't be much difference.
While Trump provided tariff relief for dozens, he hiked the penalty on China even further.
'That's what I did with China, because they did retaliate, so we'll see how it all works out. I think it's going to work out amazing," the President said.
As Australia's economy is closely linked with China's, further tariffs could be bad news as items made in China but sold by US companies to Aussie shoppers could become far more expensive.
China's trade with China is worth about $325.5 billion, while two-way trade with the United States was worth $98.7 billion in 2023.
However, Motley Fool chief investment officer Scott Phillips told Yahoo Finance it could end up meaning cheaper prices for Aussies.
"It might be the case that we benefit in the short term from those tariffs," he said.
"If China is looking for other markets for its products then Australia becomes an alternative market as people are lowering their prices just to clear the inventory."
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