Economy

American Retail Industry Fearful As Trade War Escalates

American Retail Industry Fearful As Trade War Escalates

The early declines followed an announcement by the Chinese government that it plans to impose tariffs of 25 percent on a list of more than 100 US goods worth $50 billion, including soybeans and aircraft.

China and the United States have announced tariffs on more than $100 billion of combined goods. "We have done everything to prevent this from happening, but we are still calling for a resolution", said Zhang Xiaoping, China Director of the U.S. Soybean Export Council said.

Beijing was responding to an announcement hours earlier by Trump's administration outlining proposed tariffs on 1,300 imported Chinese products, including industrial robots and telecoms gear, to protest China's alleged theft of USA technology.

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The powerful US Chamber of Commerce, a stalwart supporter of Republican lawmakers, said tariffs were "not the way" to achieve fairer trade with China.

"I think China is perfectly happy to play a game of chicken with the United States on this because they believe the USA will blink first".

LONDON, April 4 (Reuters) - Share markets recoiled on Wednesday as a $50 billion retaliation from China in escalating trade tensions with the United States left investors reluctant to take positions in anything but the safest of assets.

Markets have been buffeted in recent weeks by everything from a volatility spike and a tech selloff to fears of an all-out trade war. And we believe that tariffs on certain machinery will make American-made products more expensive. China's envoy to the World Trade Organization, Zhang Xiangchen, called it "an intentional and gross violation of the WTO's fundamental principles of non-discrimination and bound tariffs".

Some analysts pointed to comments by recently-installed White House economic advisor Larry Kudlow who suggested President Donald Trump's strident approach to China was a negotiating tactic to win concessions.

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"China's response was tougher than what the market was expecting - investors didn't foresee the country levying additional tariffs on sensitive and important products such as soybeans and airplanes", Gao Qi, Singapore-based strategist at Scotiabank, told Bloomberg.

The US Trade Representative's Office said those goods benefit from Chinese policies that require companies to turn over technology to Beijing.

The tariffs are expected to affect about $50 billion worth of Chinese goods including semiconductors, lithium batteries, communications satellites, television components, dishwashers and snow blowers.

Big industrial and technology stocks were hardest hit by the selling.

Investors are hoping Trump's execution of the China tariffs mirrors his handling of steel and aluminium tariffs, which were announced with harsh rhetoric but later watered down with exemptions. "But if someone insists on fighting a trade war, we will be there".

Last month, Chinese ambassador to Washington, Cui Tiankai, said, "We do not want a trade war with the United States or with anybody else, but we are not afraid of it".

China then responded within 11 hours with penalties on US$50 billion of USA goods ranging from soybeans, cars and chemicals to whisky, cigars and tobacco with its Vice Finance Minister stressing the country had never given in to external pressure.

GM rival Ford Motor Co F.N lost as much as 3 percent while electric carmaker Tesla TSLA.O Inc, which depends on China for 17 percent of its revenue, fell as much as 5.8 percent.