Published: Fri, June 22, 2018
Money | By Ethel Goodwin

Global stocks tumble after new Trump tariff threat

Global stocks tumble after new Trump tariff threat

"Buckle up, as this could get messy", he warned in a note to clients.

The potential tariffs released on Monday are in retalitation to that statement from China. In 2017, China imported 60 percent of total USA soybean exports, representing almost 1 in 3 rows of harvested soybeans, with a value of $14 billion. Another 280 or so still need to undergo a public comment period, and will take effect later. China's tariffs would target agricultural products, cars and seafood, among other items. Three people close to Apple, who remained anonymous because they are not authorized to speak for the company, say that the tech giant's top worry is that the Chinese wreak havoc with Apple's supply chain by forcing suppliers to provide pointless paperwork in order to gum up the works.

He ordered U.S. Trade Representative Robert E. Lighthizer to identify $200 billion worth of Chinese goods for additional tariffs at a rate of 10 percent, which will be imposed if Beijing "insists on going forward with the new tariffs that it has recently announced".

Additionally, the president has promised further escalation in his attack on China's alleged theft of intellectual property and unfair trade practices should it respond with more tariffs on U.S. goods, promising to pursue tariffs on yet another $200bn of Chinese products.

Beijing responded to Trump's announcement last week by applying tariffs to 659 US products, including agricultural products, cars and marine products. It remains unclear when and exactly how the new tariffs willl take effect.

If the tariff hike goes ahead, "China will have to adopt comprehensive measures that combine quantity and quality", the statement said. If Intel makes a chip at its US plants in Oregon, Arizona or New Mexico, then sends it to China for low-level assembly work and then brings it back so it can be put into a device manufactured in the United States, the chip would get hit by the tariff.

Trump's announcement fuelled fears that economic losses, limited so far to companies hit by USA or Chinese tariff hikes, might spread if the dispute chills global trade.

The ministry also expressed its disappointment that the new tariffs do not reflect the "consensus" the two countries had come to during recent trade negotiations, after which China declared the trade war was over. That means things like tourism and education, industries from which the United States benefits a lot more than China does.

Read: What can Beijing do if China-US trade row worsens?

Spooked by worsening tensions over trade between the world's two largest economies, investors are selling stocks and commodities and buying safer assets.

However, this did not stop China from saying immediately that it would retaliate with "equal scale and equal strength". If the trade war escalates, and destabilizes the global economy, the good vibes might not last much longer.

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