The tech-heavy Nasdaq index of stocks is off 13 percent from its August high. The broader S&P 500 index also swung wildly in October and was down 7% for the month. The closely watched Dow Jones Industrial Average of stocks fared similarly during a rough month for traders and 401(k) plans.
Markets around the world have tumbled in recent weeks as investors are increasingly rattled by developments including rising interest rates, weakening global economy, no end in sight to trade difficulties, and waning earnings prospects.
In October the International Monetary Fund cut its global growth forecasts as trade tensions between the U.S. and trading partners have started to hit economic activity worldwide.
Ongoing trade tensions that have hit the market towards the end of the current business cycle could deal a "double whammy" to the global economy, said Singapore's Minister for Trade and Industry Chan Chun Sing.
Chan's comments came amid the escalating trade conflict between the world's two largest economies: The U.S. is reportedly preparing new tariffs against all remaining Chinese imports if upcoming trade talks between President Donald Trump and President Xi Jinping break down.
"The most important thing is whether this will lead to a global loss of confidence and investment," Chan told CNBC's Sri Jegarajah at the Singapore International Energy Week.
"And if this global loss of confidence and investment coincides with what we call the late cycle issues on the financial markets, then we might have a double whammy," he added. "Late cycle" refers to a stage in an economic recovery when activity stagnates and growth slows down.
Singapore is a tiny Southeast Asian economy that is highly dependent on trade — making it particularly vulnerable in a worsening conflict between the U.S. and China. Its exports of goods and services in 2017 were almost 200 percent of its roughly $300 billion gross domestic product, according to the World Bank.
The country's central bank, the Monetary Authority of Singapore, said current global uncertainties would result in slower growth for the rest of this year and in 2019.
"I think we have to be prepared that the situation might take a while before it improves. As far as Singapore is concerned, we're going to continue to diversify our economy to make sure that we're neither dependent on any specific market nor any specific sector," Chan said.
Commerce Secretary Wilbur Ross is among a slate of Trump administration officials who some say will be leaving their jobs in the weeks following Election Day. POLITICO's Nancy Cook reported that the Commerce Secretary is planning to leave based on her interviews with a half-dozen current and former Trump officials and Republicans close to the White House. The Commerce Secretary joins a list that also includes Attorney General Jeff Sessions, Defense Secretary James Mattis and Interior Secretary Ryan Zinke as expected to depart the administration.
"Zinke is expected to move agencies, or leave the administration altogether," Cook reported, "thanks to his grander political ambitions or the numerous ethical investigations that have dogged his tenure at Interior." President Donald Trump's allies added that the president will choose replacements that could benefit him politically.
"The President is looking to get better performers — all of these decisions are being made in the context of the re-election campaign," said one Republican close to the White House. "Trump wants the strongest possible A-team going into 2020."
The desire to go into the re-election campaign may not be the only driver of the departures. Should the Democrats win control of the House next week, Ross and Zinke could be looking at greater scrutiny on ethics issues that have been raised but not pressed in the chamber to date.
President Trump may yet follow through on his proposal to impose tariffs on all remaining Chinese imports.
Bloomberg reports that the administration could announce the levies by early December, to take effect by early February. The plan is said to be in reserve in case a meeting next month between President Trump and President Xi Jinping of China doesn’t yield desired results. The tariffs could cover about $257 billion worth of goods — including popular items like iPhones and Nike sneakers.
That means American shoppers could feel the full brunt of the trade fight for the first time. Citigroup analysts wrote in a research note: “Amid tight labor markets and higher input costs, we think there is a risk that firms decide to pass through some of the costs to consumers.”
Experts said that the move sets an aggressive new precedent over how America responds to alleged I.P. theft. What’s unclear is whether it will spur Washington and Beijing to use national security concerns more frequently as weapons in their trade fight.
The prospects that trade tensions could ease after an upcoming meeting between President Donald Trump and Chinese President Xi Jinping got a lot more uncertain after it was reported that the White House could escalate tariffs in short order if the gathering on the sidelines of the G-20 doesn’t produce some results.
“USTR definitely seems to be seeking ways to continue to increase pressure and create more leverage, and other agencies seem to be interested in using leverage that they have already created,” said one source close to the process. “None of this is a strategy. This continues to appear to be a series of tactics.” White House press secretary Sarah Huckabee Sanders on Monday declined to comment on the G-20 meeting’s potential trade outcomes, saying it would be “consequential no matter how you look at it.”
“They need to get to a point where they can come to an agreement of discussing what China is willing to do and determining whether that is sufficient to address U.S. concerns,” said Erin Ennis, senior vice president of the U.S.-China Business Council.
Derek Scissors, a resident scholar at the American Enterprise Institute who has advised the administration on China issues, said he heard that some people in the White House wanted to exert some leverage before the meeting. “Parts of the administration believe more pressure will give them a better outcome,” he said. But he discounted the G-20 get together on Nov. 30-Dec. 1 as anything more than a step in the process. “The G-20 meeting isn’t supposed to lead to an outcome. It’s supposed to lead to a process where trade actions are on hold,” he said.
Carmakers in foreign-trade zones that employ thousands of workers in the United States may find themselves compelled to shift jobs to, of all places, China.
Carmakers’ early hopes that congressional Republicans who favor free trade could reduce the impact of punitive measures have faded, reported the New York Times. Instead, manufacturers are girding for a protracted period of conflict that will disrupt supply chains and change the companies’ calculations about where to expand and where to cut back.
BMW, the largest exporter of cars from the United States, has already moved some production of its popular X3 sport utility vehicle — once made exclusively in FTZ 38 in Spartanburg, S.C. — to a factory in Shenyang, China. Analysts expect the German automaker to also move some production of its larger X5. Fellow foreign-trade zone users Volvo and Mercedes are similarly impacted.
By shifting production, BMW can avoid China’s retaliatory tariffs on cars imported from the United States. It could also insulate BMW if President Trump follows through on his threat to tax imported vehicles and parts, a move that would further increase the cost of building cars in the United States and selling them abroad.
The Chinese government is encouraging expansion, and thereby shifts away from U.S. manufacturing. It is allowing BMW to increase its stake in a Chinese joint venture to 75 percent from 50 percent, an unprecedented majority share for a foreign carmaker that makes BMW the first company to benefit from a policy meant to give the makers of passenger cars larger stakes in such joint ventures.
Business leaders in South Carolina and other areas that depend on foreign carmakers are registering alarm. At the very least, they wonder if jobs to be created for future models will shift out of the United States.
“It’s a tremendous concern,” said H. David Britt, a member of the Spartanburg County Council who last month appeared before the Senate Finance Committee to warn of the threat the tariffs posed to South Carolina’s economy.
“It’s not just BMW,” Mr. Britt said by telephone from Spartanburg. “It’s every one of the suppliers that produce for BMW.”
BMW’s production in Spartanburg slumped 6 percent in September compared with a year earlier. The company, which has had operations in Spartanburg since 1994 and employs 10,000 there, cited trade tensions in issuing a profit warning last month.
China is a big and profitable market for BMW. But retaliatory tariffs of 40 percent on imported cars have sharply raised the cost of X5s in China. The company was able to skirt some of the tariffs by meeting some of the demand in China with cars partly built in South Carolina and finished in Thailand.
BMW is stepping up its investments in China. It has announced that it would spend $3.4 billion to expand its Shenyang operations and hire 5,000 workers over the next several years. The two factories it operates there could eventually surpass Spartanburg, BMW’s largest factory in the world, in the number of cars produced.
BMW representatives emphasize that the company has not decided to relocate production of the X5, one of its most profitable models, from Spartanburg. But Saskia Essbauer, a spokeswoman, said: “Production always follows the market. Naturally as a company we have an interest to produce where the demand is.”
Others are following BMW’s lead. ZF, a major German auto industry supplier, recently said that it would build a factory in China to produce transmissions used in the X5 and other BMW models.
“Our philosophy is we follow our customers and we serve our customers where they need us,” said Christoph Horn, a ZF spokesman.
Other foreign car companies will have to make similar assessments. Mercedes-Benz employs about 4,000 workers at a large factory in Alabama. The Swedish carmaker Volvo, which belongs to Zhejiang Geely Holdings of China, opened a plant in South Carolina in June. Volvo plans to hire 1,500 people in the state. Daimler, which exports Mercedes cars to China from a factory in Tuscaloosa, Ala., has warned that trade tensions were hurting its sales. In a call with reporters on Thursday, Bodo Uebber, the chief financial officer, said the company was reviewing ways to counter the effect of the tariffs, which have meant higher prices for clients and dealers.
Mr. Uebber said that Daimler was “currently delivering normally into China.” Asked about possible changes in the production line, he said, “We are looking at other alternatives, but it is too early to say anything.”
There are also signs the trade war could crimp investment by Volvo at its new factory in Charleston, S.C. The company may not hire as many people there as planned, Anders Gustafsson, the executive responsible for Volvo in the United States, told the Detroit Bureau website this month.
In October Prime Minister Shinzo Abe became the first Japanese leader to make an official trip to China in nearly seven years. Mr. Abe reached trade deals with China and committed to stable relations in a day of meetings with President Xi Jinping and Premier Li Keqiang.
China is Japan’s largest trading partner, and as China fights an escalating trade war with the United States and Japan prepares for what could be tense two-way trade talks with the United States early next year, Mr. Abe is keen to emphasize an open trading relationship with China.
As Japan worries about the prospect of American tariffs on its auto exports, it is looking to further develop car sales in China which could impact U.S. FTZs if American plants are bypassed in the process. According to Japanese media, Toyota plans to increase its production in China and expand plants in two major Chinese cities.
The visit also comes at a time of shifting power dynamics around the Pacific Rim. President Trump is distancing himself from traditional allies, diplomacy is stalling around the effort to denuclearize North Korea and both China and Japan are seeking to curry favor with Southeast Asian countries.
Japan and China have a bitter and bloody history dating back to World War II, but have slowly warmed up to each other. The nascent rapprochement comes after several years of friction, including a tense period of Cold War style escalation between ships when the countries contested their claims to islands in the East China Sea.
The American President is rattling leaders around the world, but Asia is particularly unsettled by concerns that Mr. Trump is abandoning American leadership in the region. Until recently, Mr. Xi has behaved as if China could keep Japan at an arm’s length. Now he is more receptive to the outreach from Japan because China is coming under increasing pressure from the United States. Mr. Xi realizes that China cannot afford to have a fractious relationship with Asia’s other big power at the same time.
For Japan, the fear is that China would rush to fill any void left by a reduced American presence in Asia, imposing its authoritarian rule and potentially anti-competitive trade practices across Southeast Asia.
While Japan certainly wants to reset relations with China on a friendlier footing, it does not want to give away too much. So while it is looking to establish some joint projects with China — such as developing renewable energy in Thailand — it has continued to signal its strong posture on security in the region. Last month, for example, a Japanese submarine participated in war games in the South China Sea and made a port call in Vietnam, a clear pushback against China’s widening territorial claims in the region.
Calming tensions or the risk of military confrontation between two rivals at a time of global instability would reassure the rest of Asia. The symbolism of Japan’s flag flying in Tiananmen Square next to the flag of China certainly sends a message of peace.
The trees surrounding your Capitol building have not yet changed color due to the warm and wet weather last month in Washington DC. Those trees will turn eventually, but what about the Capitol itself? Will either or both chambers change from Red to Blue? Should that happen there will be dramatic changes affecting trade in Washington. Committee Chairmanships would change hands in the affected chamber(s) when the new Congress is seated in January, which could invoke scrutiny of past administration actions and complicate new initiatives such as the effort to implement USMCA, the replacement for NAFTA. There are also talks of high-level personnel replacements that will affect the FTZ community even without a change in control in the House or Senate. Want your voice to be heard in Washington? Vote next Tuesday.