Stocks fall as Trump threatens to reignite trade war

Fredrick Soto
May 11, 2019

President Trump says he will raise tariffs on $200bn (£152bn) of Chinese goods on Friday with his officials accusing China of reneging on promises.

June Comex gold futures may be underpinned throughout the session on Friday, but prices may not move much if money leaving the stock market continues to flow into the Japanese Yen and U.S. Treasurys for protection.

Tariffs are taxes paid by importers on foreign goods, so the tariff imposed by the USA on Chinese goods would be paid by American companies.

Since 2010, Chinese officials, including Xi, made 10 specific commitments to address U.S. complaints about trade-secrets theft and forced technology transfer, according to the Office of the U.S. Trade Representative.

Trump also said that paperwork had been initiated to levy 25 per cent tariffs on a further US$325 billion worth of Chinese goods.

China appealed to the United States to help salvage the deal earlier on Thursday.

The possibility that the trade dispute could escalate represents a marked shift from just a few weeks ago, when talks between the US and China appeared to be on track for an agreement.

For 40 years, USA leaders have prioritized deepening economic ties between the two countries rather than confront China over its trade practices.

"We may very well see tariffs put in place tomorrow, but it's going to get resolved", Stoltzfus said.

Washington has demanded far-reaching and profound changes to the Chinese economy, such as submitting state enterprises to market principles, reducing massive subsidies and ending the alleged theft of USA technology.

A protracted trade war between the United States and China would damage the world economy, disrupt supply chains and rattle investors already nervous over a global slowdown.

Douglas H. Paal, vice-president of the Asia Program at the Carnegie Endowment for International Peace, said it "makes sense to continue the talks because the alternative would be a drastic signal to markets".

USA officials are insisting that any deal be strictly enforced so that China lives up to its promises - something they say Beijing has repeatedly failed to do in the past.

The tariffs would target chemicals, building materials, furniture and some consumer electronics among other goods.

US stocks pared declines after Trump's remarks.

The country's share markets have taken a battering due to the renewed trade tensions, however.

Other major indexes in Asia, such as the Shanghai composite and Hong Kong's Hang Seng Index shed 0.41 percent and 0.42 percent, respectively, around 10:30 a.m. Japan's Nikkei 225 was also down by 0.86 percent in the same time period. The S&P 500 was up 1.84 points, or 0.06%, at 2,885.89 and the Nasdaq Composite was up 3.11 points, or 0.04%, at 7,966.87. Analysts expected a gain.

"The U.S. side has given many labels recently, "backtracking", "betraying" etc".

The S&P 500 fell 4 points, or 0.2%, to 2,879.

But imports from the United States declined by even more - nearly 26%, widening China's trade surplus with the United States. That uncertainty has weighed on investor confidence around the world, and has contributed to losses.

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