(qlmbusinessnews.com via news.sky.com– Tue, 19 June, 2018) London, Uk – –
Stock markets react to the latest threats following last week's tit-for-tat imposition of tariffs between the two countries.
Investors are reacting nervously to a potential escalation in President Trump's trade war with China, with stock markets falling sharply in Asia.
China's Shanghai Composite lost up to 5% of its value at one stage after the US president asked officials to identify $200bn of Chinese goods to be subject to a 10% tariff.
It prompted Beijing to accuse Washington of “blackmail” – warning it would respond to any such measures.
That followed last Friday's decision to impose 25% tariffs on $50bn of Chinese products.
Then, Beijing immediately retaliated by matching the US levy, which prompted Mr Trump to up the ante once more in what he regards as an unfair balance in trade between the two superpowers.
In a statement he said: “This latest action by China clearly indicates its determination to keep the United States at a permanent and unfair disadvantage, which is reflected in our massive $376bn trade imbalance in goods. This is unacceptable.
“Further action must be taken to encourage China to change its unfair practices, open its market to United States goods, and accept a more balanced trade relationship with the United States.
“Therefore, today, I directed the United States Trade Representative to identify $200bn worth of Chinese goods for additional tariffs at a rate of 10%.
“After the legal process is complete, these tariffs will go into effect if China refuses to change its practices, and also if it insists on going forward with the new tariffs that it has recently announced.
“If China increases its tariffs yet again, we will meet that action by pursuing additional tariffs on another $200bn of goods. The trade relationship between the United States and China must be much more equitable.”
The increasingly bitter trading relationship between the US and China comes less than a fortnight after a fractious G7 summit where Mr Trump's use of tariffs, both against China and on steel and aluminium imports from the EU, Canada and Mexico, was roundly criticised.
The latest escalation was reflected in the value of shares in both Asia and Europe.
The Shanghai Composite closed almost 4% down while Hong Kong's Hang Seng lost 3%.
All major European markets were also trading lower – the FTSE 100 faring better than most with just a 1% decline in early trading.
Commenting on President Trump's latest threat, head of Asia-Pacific trading at OANDA Stephen Innes, said: “That was quick and sudden, reminding us just how quickly things can get right out of hand.
“Indeed, this is moving beyond ‘tit-for-tat' levels and, predictably, investors are running for cover under the haven umbrellas as global equity indices are crumbling under the weight of an escalating trade war.
“Buckle up as this could get messy,” he concluded.