Stocks tumble on latest Trump-China trade threats

The Japanese yen strengthened to 110.02 against the dollar, up as much as 0.47 percent on the day, after President Trump threatened to impose a 10 percent tariff on $200 billion of Chinese goods, fuelling trade war worries with Beijing.

China's tariffs had themselves been a reaction to Trump's announcement on Friday that the US would be imposing a 25 percent tariff on $50 billion of Chinese goods.

Washington and Beijing appeared increasingly headed toward open trade conflict after negotiations failed to resolve USA complaints over Chinese industrial policies, lack of market access in China and a $375 billion U.S. trade deficit.

Last week, Mr. Trump announced plans for tariffs on $50 billion worth of imports from China in the technology sector, a move aimed at what he called "bringing balance to our trade relationship with China".

The top White House trade adviser, Peter Navarro, says Beijing "may have underestimated the resolve of President Donald J. Trump" by refusing to meet US demands on trade and by threatening to retaliate against American trade sanctions. "Further action must be taken to encourage China to change its unfair practices, open its market to United States goods, and accept a more balanced trade relationship with the United States".

It was not immediately clear when the new tariffs could be put in place, as the trade office has yet to identify the Chinese goods to be penalized or conduct a legal review.

China's Commerce Ministry on Tuesday criticised the latest threat of tariffs, saying it was an "act of extreme pressure and blackmail that deviates from the consensus reached by both parties after many negotiations, and is a disappointment to the worldwide community".

Apple is also concerned that the Chinese government will point to the way that Huawei has been accused of being a threat to US national security, and take some type of action against Apple. Last week he threatened 25 percent tariffs on $50 billion in Chinese products with another $100 billion targeted beyond that.

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US stocks may be getting slammed by the latest trade tensions, but equities in China are faring far worse.

China's commerce ministry responded on Tuesday by saying Beijing would fight back firmly with "qualitative" and "quantitative" measures if the United States publishes additional tariffs.

Analysts say the Chinese government could target trade in services between the two countries rather than physical products. "It did not meet the current development trend of the world, harmed the interests of the people and enterprises of China and the United States, and harmed the interests of the people of the world".

Pompeo raised the trade issue directly with China last week, when he met in Beijing with President Xi Jinping and others. When you consider the number of jobs that Apple is responsible for in the country, and how highly the iPhone is thought of in China, we'd expect the device to be kept out of the trade war by China, too.

China's foreign ministry also commented on the trade row on Tuesday, and while failing to offer any new ideas on the issue, it repeated the official line that although Beijing does not want a trade war, it is not afraid of fighting one.

But just because Beijing can't retaliate reciprocally, doesn't mean it can't hit back proportionately: China can still disrupt USA supply chains by freezing activities at select ports, or decline to approve acquisitions sought by American companies.

"Canada's not going to take advantage of the United States any longer", Trump said. Many in the Republican Party, who are more instinctively in favour of free trade, don't think this is the right way to tackle problems with China. "This is a problem that is long overdue in being tackled", Pompeo said.

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