Stocks drop on threat of new China tariffs

Stocks drop on threat of new China tariffs

Stocks drop on threat of new China tariffs

Shares and oil prices have tumbled after President Donald Trump jolted markets with a threat to raise more tariffs on imports from China, spooking investors who had been expecting good news this week on trade. Late a year ago, Trump had threatened to hike tariffs on Chinese imports if a trade deal was not struck by March 1.

On Sunday, Trump threatened on Twitter to increase tariff rates on $200 billion in imports from China to 25%, up from 10% now. He also threatened to impose 25% levies on an additional $325 billion of Chinese goods "shortly".

The tariffs imposed by Trump in 2018 cost the USA economy $6.9 billion last year-above and beyond the $12.3 billion paid by American consumers and importers to the federal government.

The World Trade Organisation (WTO) has warned that a full-blown trade war between. "Well the tariffs have been a necessary thing for me to do...we're losing $181 billion dollars a year, we have been for many years".

That means there's a risk China would counter any extension of US levies, though the smaller size of its imports may constrain its ability to do so.

Cumulatively, in the first quarter of 2019, Chinese imports fell nearly a third year-on-year, while exports fell nearly a tenth. Economists from the Federal Reserve Bank of NY and Columbia and Princeton universities found in a recent study that the us consumers and businesses, not China, were paying for the cost of the tariffs, which had resulted in $3 billion a month in higher taxes.

US officials did not weigh in on whether China would attend this week's talks.

Mr Trump's latest move will raise duties on more than 5,000 products made by Chinese producers, ranging from chemicals to textiles and consumer goods.

The motorcycle manufacturer said European Union and China tariff-related costs were $23.7 million in 2018 and are expected to range between $100 million and $120 million in 2019. And while he was venting, he tweeted a threat to hit Americans with more tariffs.

A full-scale trade war is unlikely, he said, but "would be bad for everything Berkshire owns.".

"The FX markets are reacting in a classic risk-off manner, with the United States dollars trading mainly higher". The yuan also weakened the most in three years and bonds climbed.

The June crude contract was down 38 cents at US$61.56 per barrel and the June natural gas contract was down 3.7 cents at US$2.53 per mmBTU.

The US economy grew 3.2 per cent in the first quarter, faster than the 2.9 per cent in the last pre-tariff quarter.

"Nonetheless, Trump's tweet allusions to tariffs being "partially responsible for. great (US) economic results" does raise the threat of misguided trade policy" from the USA, it said.

In fact, on a recent trip Breitbart News went on to Taiwan for the 40th anniversary of the Taiwan Relations Act-which established deep unofficial ties between the United States and Taiwan after President Jimmy Carter in 1979 switched official diplomatic relations to the People's Republic of China (PRC) on the mainland-a number of Democrats and Republicans were there.

"I think the disruption to the world economy and the financial markets is far more costly than any gains the U.S. will achieve in trade relations with China", Gary Hufbauer from the Peterson Institute for International Economics told DW.

Sept 24: U.S. and Chinese tariffs of 10 per cent go into effect.

Currencies closely tied to the performance of the Chinese economy, such as the Australian and New Zealand dollars, have also fallen sharply while the Japanese yen, renowned for its safe haven status, has strengthened despite Japanese markets remaining closed for Golden Week holidays.

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