Stocks slump in global sell-off after Trump's China tariff threats

Donald Trump’s salvo in a brewing US-China trade war would mean a sizable amount of Chinese imports would be exposed to tariff threats

Donald Trump’s salvo in a brewing US-China trade war would mean a sizable amount of Chinese imports would be exposed to tariff threats

President Donald Trump threatened to impose a 10 percent tariff on another $200 billion of Chinese goods, and Beijing warned it would retaliate.

He doubts the latest dispute would damage the relationship between the two countries.

The intellectual property sanctions were the latest in a spate of protectionist measures unveiled by Trump in recent months that included tariffs on steel and aluminum imports to the USA and a tough rhetoric on trade negotiations from North America to Asia.

And the China trade offensive is only one side of Trump's multi-front battle with all major USA economic partners.

"The latest headlines from Trump are pushing investors to risk-off-mode", said Shintaro Ikeshima, chief manager of forex and financial products trading division at Mitsubishi UFJ Trust and Banking Corp.

Russia's Economy Minister, Maxim Oreshkin, said the tariffs would target goods of which the Russians already had domestic equivalents.

If the United States publishes a new list of tariffs, Beijing will take strong countermeasures to safeguard the interests of China and its people, the ministry said.

US President Donald Trump raised the stakes in the trade dispute with China by threatening to impose tariffs on another US$200b worth of Chinese goods.

Washington's dispute with China is part of broader USA complaints about global trading conditions that have prompted Trump to raise duties on steel, aluminum, washing machines or solar panels from Canada, Europe, Japan and South Korea.

Read: What can Beijing do if China-US trade row worsens? That's 90 percent of everything China exports to the US, from electronics, clothing, toys, tools, you name it. If implemented, the tariffs would mean a sizable amount of imported Chinese goods would be exposed to new tariffs.

"Risking a trade war with more tariffs will only invite more retaliation that will cause significant harm to the USA economy", said the group, urging the administration instead to "work with our allies and place coordinated pressure on China to end their harmful trade and investment practices".

USA stocks fell on Tuesday as a sharp escalation in the trade dispute between the United States and China rattled markets and put the Dow Jones Industrial Average back in negative territory for the year.

The small-cap Russell 2000 index, whose components are relatively more insulated to a global trade war, was down 0.51 percent.

Worries about a trade war between the United States and China has been brewing for most of the year as the two countries have traded threats.

Hong Kong also faced an "unquantifiable impact from the spillover" of the dispute between the USA and Europe, which could trigger trade to divert from Hong Kong to other countries, he said.

China protects its companies in many sectors, especially high-tech.

But, he said, "the United States will no longer be taken advantage of on trade by China and other countries in the world".

The president said the move was a retaliatory response to China's decision to raise tariffs on $50 billion of American goods, including cars, tobacco, petrochemicals and agricultural products.

Monday's tariff threat comes on top of $34 billion of Chinese goods subject to an extra 25 percent tariff effective July 6 in response to complaints Beijing steals or pressures companies to hand over technology. American farmers export about $14 billion worth of soybeans to China each year and have been voicing concerns about what a trade war could do to their livelihoods.

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