Wall Street slides, Dow erases 2018 gains as trade spat intensifies

Larry Hoffman
June 20, 2018

It wasn't immediately clear when the new tariffs could be put in place, as the trade office has yet to identify the Chinese goods to be penalized or conduct a legal review.

Then China followed suit, unveiling 25 per cent duties on US$50 billion in USA imports - matching the U.S. rates.

Analysts say the Chinese government could target trade in services between the two countries rather than physical products.

Beijing has accused the United States of "extreme pressure and blackmailing" and vowed to retaliate after Trump threatened more tariffs on $200bn of Chinese products. National Retail Federation President and CEO Matthew Shay called Trump's threat to impose duties on $200 billion worth of additional goods "a reckless escalation".

"Trade between our nations, however, has been very unfair, for a very long time".

Beijing has offered to narrow its politically volatile trade surplus with the United States but has resisted changing technology development tactics its leaders see as a path to prosperity and to restoring China's rightful role as a global leader.

On Tuesday, CNBC "Mad Money" host Jim Cramer dismissed concerns that the USA and China are engaged in a trade war.

President Donald Trump announced Monday that he was considering a 10 percent tariff on $200 billion in additional imports from China. "China's government will step up an already intensive effort to determine whether Trump has the political strength to carry out his threats, while working to maximize pressure on United States interests to force him to back down and accept a compromise".

"This is unacceptable", Mr. Trump said.

Traders are moving into the safety of the US dollar and US Treasurys.

The small-cap Russell 2000 index was down 0.5 percent, a smaller drop than its large-cap peers, as its components are relatively more insulated to a global trade war.

Wall Street stocks tumbled in opening trading on Tuesday as fresh tariff threats by the United States and China against each other exacerbated trade war fears.

"It's kind of a lose-lose for both the people in China and the USA soybean industry, and the soybean farmer", said Bardole. The ministry also expressed its disappointment that the new tariffs do not reflect the "consensus" the two countries had come to during recent trade negotiations, after which China declared the trade war was over.

The move defied the White House's decision to replace the ban with a $1.4 billion fine, providing a lifeline to the firm threatened with collapse as it relies on the crucial USA hardware. That would encompass roughly 90 percent of the $505 billion worth of goods that China exported to the United States in 2017.

Also caught in the crossfire was Chinese telecoms company ZTE Corp, whose rescue by Trump in a deal with Chinese President Xi Jinping appeared in doubt after a U.S. Senate vote on Monday.

Mr. Trump recently ordered tariffs on $50 billion in Chinese goods in retaliation for intellectual property theft.

On Monday evening, President Donald Trump escalated trade tensions with China.

The White House hasn't set a date for the imposition of any new tariffs beyond the initial list.

Beijing wants to "demonstrate that things will be done their way or not at all", said Christopher Balding, an economics professor at Shenzhen's HSBC Business School, who believes Chinese policymakers prefer demonstrations of "power and control" over "technical policy rightness".

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