Economy

World markets tumble amid US-China trade tensions

World markets tumble amid US-China trade tensions

Still, the United States has not backed down from hiking tariffs on US$200 billion (S$272 billion) worth of Chinese goods to 25 per cent on Friday.

Financial markets turned volatile this week after President Donald Trump threatened to impose more tariffs on Chinese goods, a threat that is set to become reality early Friday.

June Comex gold futures may be underpinned throughout the session on Friday, but prices may not move much if money leaving the stock market continues to flow into the Japanese Yen and U.S. Treasurys for protection.

The President, who has frequently expressed optimism about progress in the months-long talks, renewed his tariff threats after a briefing late last week in which advisers told him the Chinese were reneging on key elements of a potential deal.

Reuters on Wednesday revealed the extent of the rift that has opened between the two countries, reporting that a draft trade agreement text sent by Beijing on Friday night was riddled with changes that marked reversals in Chinese commitments that undermined core USA demands.

Trump also said that paperwork had been initiated to levy 25 per cent tariffs on a further US$325 billion worth of Chinese goods.

"I did get, last night, a very lovely letter from President Xi [Jinping], [saying] 'Let's work together, let's see if we can get something done, '" said Trump.

Hours later, he tweeted that China's vice premier, Liu He, would be coming to the United States to make a deal.

More news: Myanmar: Reuters journalists jailed for reporting on Rohingya killings freed from prison

The recent backsliding that irked Trump may indicate that Beijing has misread him and expects the unconventional US leader to make the same choice, Friedberg said. "A variety of plans are in place, such as countermeasures for any tariff rise, and favourable policies to minimise losses for Chinese enterprises", the Global Times, a tabloid published by the ruling Communist Party's People's Daily, said in an editorial.

USA officials say they must have more than promises this time.

The tariffs would target chemicals, building materials, furniture and some consumer electronics among other goods.

Stephens, a grower from Clinton, Kentucky, said that USA farmers are in a tough situation, and with depressed prices and unsold stocks forecast to double before the 2019 harvest begins in September, farmers urgently need the China market.

Investors have been anticipating a deal throughout this year, which contributed to double-digit gains in all the major indexes.

The Dow Jones Industrial Average slid 66.47 points or 0.3 percent, after being down nearly 500 points earlier in the session. Given that the U.S.is still the world's largest economy and has dominated the economies of many other countries for years, the idea is ridiculous, but it helps to whip up racist fears.

"The U.S. side has given many labels recently, "backtracking", "betraying" etc". While nearly no cars are imported from China (GM imports a small number of smaller SUVs that it makes in China), a good number of auto parts are, which will increase the cost of making trucks and SUVs in the United States. Intel lost 5.4% and Medtronic fell 2.3%. Exports to China jumped 23.6% in March.


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