Tuesday, 21 May, 2019


Stocks plunge for 2nd day on U.S.-China trade jitters

Trump said he would increase the current 10 per cent tariff on US$200 billion worth of Chinese goods to 25 per cent on Friday US Says China Backtracked On Trade Commitments, Talks Continue
Conrad Doyle | 08 May, 2019, 05:10

United States equities fell by the most since March as investors are cautious over President Donald Trump's threat to increase tariffs on billions of dollars of imports from China.

Traders work on the floor at the New York Stock Exchange on Tuesday, when major stock indexes plunged after US officials accused China of reneging on commitments in trade negotiations.

The US and China have raised tariffs on tens of billions of dollars of each other's goods in their dispute over US complaints about Chinese technology ambitions.

"We're moving backwards instead of forwards, and in the president's view that's not acceptable", US President Donald Trump's most senior trade adviser, Robert Lighthizer, told journalists on Monday.

Traders are keeping a close eye on trade talks between the USA and China.

Trump said Sunday he also planned to impose 25% tariffs on another $325 billion in Chinese products. The door was not closed to talks even if the United States raises tariffs, the newspaper said. Additional tariffs are set to take effect on Friday if a trade agreement is not reached by then.

His words were echoed by Treasury Secretary Steven Mnuchin, who indicated that Beijing was backtracking on the "language [of the deal] that had been previously negotiated", which could alter a future trade deal "dramatically". He declined to give specifics and said the U.S. side had originally hoped to conclude a deal one way or the other this week. Washington, Europe, Japan and other trading partners say those violate China's market-opening commitments and are based in part on stolen technology.

Chinese Vice Premier Liu He will travel to Washington for two days of trade talks this week, China said on Tuesday, as the country seeks to secure a deal to avoid the sharp increase of tariffs threatened by Trump.

A spokesman at the Chinese Embassy in Washington did not immediately respond to queries about the US claims.

"We are also in the process of understanding the relevant situation", Chinese Foreign Ministry spokesman Geng Shuang said earlier in Beijing. Speaking at a daily press briefing, Mr Geng added that China hopes that the USA will work with China to resolve each other's concerns.

At the same time, China is preparing retaliatory tariffs on US imports should Trump carry out his threat, according to people familiar on the matter.

The official Communist Party newspaper, the People's Daily, led the charge, warning the U.S. to "not even think about" concessions. The door wasn't closed to talks even if the USA raises tariffs, the newspaper said. The administration, meanwhile, wants to drop them only after China demonstrates it will honor the terms of a deal - a much more practical solution that would hold China accountable. "The courts are controlled by the Communist Party, so the law is only actually applied with the party's say-so", he explained.

And yet China, with its emerging economy and its large population, is a market too big to ignore.

Meanwhile, the Australian dollar was buying 70.1 United States cents.

"Businesses have barely been able to survive the 10 percent tariff".

During a 10-month U.S.

"Had China chosen not to send a delegation to the US this week, that would mean a deal was off for a long time", he said. I think there was some thought here in Beijing - they were surprised at what the president said.

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