Dow Plunges After Trump Threatens to Renew Trade War With China
- Author: Joey Payne May 07, 2019,
May 07, 2019, 0:45
"The president is, I think, issuing a warning here, that, you know, we bent over backwards earlier, we suspended the 25% tariff to 10 and then we've left it there".
In the latest development, Trump on Sunday said those increases could now take effect on Friday and that he would target a further $325 billion of Chinese goods "shortly".
"The atmosphere of the negotiations has changed", said a Chinese official with knowledge of the talks, and how they would proceed was being re-evaluated.
Stock markets sank and oil prices tumbled as negotiations were thrown into doubt. That would be a classic Trump negotiating move, as it would jeopardize a almost done deal by causing embarrassment to the other side.
Shanghai's benchmark index fell 5.6 percent Monday despite China's efforts to limit the anticipated selloff, Bloomberg reported.
A Chinese delegation was due to travel to Washington this week for talks aimed at ending the trade war.
The US already placed 25 percent tariffs on $50 billion worth of Chinese imports, and Beijing retaliated by putting penalties on $110 billion worth of US products. Here are the answers to key questions about the rumbling dispute between the world's two largest economies.
Belying his own assertions that his trade war has helped the US economy, Trump and his representatives have been working to secure a trade deal with China that would end what the president describes as the lucrative tariffs he put in place.
United States stock futures also pointed to a slump.
"President Trump set the tone for the week, expressing dissatisfaction at the pace of China trade negotiations amid Beijing's attempt to renegotiate", Rodrigo Catril, a senior foreign-exchange strategist at National Australia Bank, wrote in a morning note. Economists from the Federal Reserve Bank of NY and Columbia and Princeton universities found in a recent study that the us consumers and businesses, not China, were paying for the cost of the tariffs, which had resulted in $3 billion a month in higher taxes.
Chinese media outlets have been told not to independently report on Trump's overnight tweets or tweet about them, and instead adhere to any report from the official Xinhua news agency, said a source with direct knowledge of the matter.
Sept 17: The US announces it will impose new tariffs of 10 per cent on another US$200 billion of Chinese goods on Sept 24, which will increase to 25 per cent on Jan 1.
The impetus for Trump's Twitter tantrum seems to have been a Sunday meeting with some of his top trade aides, who reportedly delivered a disappointing message.
Although there was always a risk the trade talks would break down in acrimony, the rapid shift from the White House comes after several weeks of both sides suggesting that the talks had been going well.
Monday's actions come amid an escalated trade war between the USA and China.
"China isn't likely to make concessions that the USA want with a big stick hanging over its head", said Zhou Xiaoming, a former Ministry of Commerce official and diplomat. The Tariffs paid to the United States of America have had little impact on product cost, mostly borne by China. Those firms can choose to pass the cost on to their customers through high prices, absorb the cost and lower their profits, or try to negotiate the cost of the goods down.