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


As the latest counter-measure against the escalating Sino-U.S. trade friction, China has chose to increase tariffs targeting 60 billion U.S. dollars' worth of U.S. products, effective June 1, 2019.

"China's adjustment on additional tariffs is a response to United States unilateralism and protectionism", the ministry said.

Going forward, however, the fallout from increased tariffs on Chinese goods will dampen global oil demand, as well as cause more stagnation in global growth, while Trump's indication that he could impose new tariffs on another $300 bn worth of Chinese goods could be severely damaging for global growth, especially still fragile emerging markets.

"We are determined and capable of safeguarding our legitimate rights and interests", Foreign Ministry spokesperson Geng Shuang said.

President Donald Trump said on Monday that his administration was planning to provide about $15 billion (£11.57 billion) in aid to help USA farmers whose products may be targeted with tariffs by China in a deepening trade war.

Mr Trump's approach in the dispute has put him at odds with his own top economic adviser, Larry Kudlow, who has said "both sides will suffer".

Trump has meanwhile also ordered the start of a process to impose new duties on about $325 billion worth of additional Chinese merchandise. After that, Washington and Beijing repeatedly slapped billions of dollars' worth of retaliatory tariffs on each other.

The higher tariffs from the US and China's response that it would take "necessary countermeasures" rattled investors Friday who had been hoping for a quick resolution to the dispute. President Donald Trump responded by announcing further tariffs against China that went into effect over the weekend. Economists say more might follow to reduce the risk of American tariff hikes.

"The perception that China can not bear it is a fantasy and misjudgment", the commentary said.

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China's Global Times newspaper reported that Beijing was also considering cutting orders for new Boeing planes and boycotting USA agricultural products.

The U.S. president said he would meet Xi at a G20 summit in Japan in late June. That being said, with a USA election just over a year away, both sides will stand to benefit from the economic boosts that inevitably come from resolving trading issues.

Earlier on Monday, Mr Trump told China not to intensify the trade dispute and urged its leaders, including President Xi Jinping, to continue to work to reach a deal.

Under a process outlined by US officials, the new tariffs would not take effect until late June at the earliest.

In the middle of the negotiations last week, Trump hiked tariffs on $200 billion of Chinese goods to 25% from 10%. Brent crude, the global standard, gained 24 cents to $70.86 per barrel.

China retaliated on Monday with $60 billion in tariffs ranging from five to 25 per cent.

Trump said there "is no reason for the United States consumer to pay the tariffs, which take effect on China today ..."

The same however can not be said for developing nations caught in the crossfire of the trade war that Trump has instigated between the world's largest and second-largest economies.