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U.S. stocks plunge as China strikes back at USA with higher tariffs

13 May 2019

The Trump administration last week announced that it will raise tariffs on $200 billion worth of Chinese imports from 10% to 25%.

U.S. agriculture products would be a natural primary target for retaliation, especially wheat, corn and pork, Wei said.

On Twitter, Trump warned Xi that China "will be hurt very badly" if it doesn't agree to a trade deal. American officials have accused China of backtracking on commitments they say it made in earlier negotiations.

Earnings this week include Alibaba, Tencent, Cisco, Nvidia, Vodafone Japan balance of payments is due TuesdayChina industrial production and retail sales are slated for Wednesday, same day as US retail sales and industrial production Bank of Indonesia has an interest rate decision on Thursday. "Washington obviously hopes that the fierce tariff war, which is unprecedented in trade history, will crush China's will in one fell swoop and force China to accept an unequal deal in a short term", the paper wrote. It had been expected that a trade deal would nudge China towards liberalising some of its services markets, particularly financial sector industries.

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China said it would impose higher tariffs on a range of U.S. goods, striking back in its trade war with Washington shortly after U.S. President Donald Trump warned it not to retaliate in the long-running trade dispute between the world's two biggest economies. The move might backfire because "extreme pressure" would not force China to capitulate.

"There are no further negotiations scheduled between the U.S. and China though Kudlow has said that China has invited Mnuchin and Lighthizer to Beijing for further talks". According to diplomats, Germany, whose exports of cars and parts to the United States are more than half the European Union total, wants to press ahead with talks to ward off tariffs on automakers Volkswagen, Mercedes and BMW.

A Bank of America Merrill report showed new tariffs pose a downside risk to 2019 earnings per share of 1 per cent to 3 per cent for S&P 500 companies in case of no resolution.

"We have to change the trading relationship between two countries for the benefit of the U.S. and its workforce and its ranchers and farmers and so forth".

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Appearing on Fox News, Trump " s top economic advisor Larry Kudlow said the consumers of the United States would pay the increased taxes. "The relationship has been too unbalanced".

"Both sides will pay", Kudlow said when pressed on the issue.

If all threatened tariffs - including the additional levies on goods from China and potential auto tariffs - were put into effect that would shave another $112.2 billion off of U.S. GDP. But it remains hopeful "that the USA can work together with China, moving in the same direction, to resolve each other's legitimate concerns on the basis of mutual respect and equality".

The move comes after on Friday US President Donald Trump chose to impose 25 percent tariffs on $200 billion worth of Chinese goods, also warning that Beijing should strike a deal, or the situation would be "far worse" for China.

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U.S. stocks plunge as China strikes back at USA with higher tariffs