World markets tumble as US, China clash on more tariffs

The Trump administration raised the stakes in its trade dispute with China on Tuesday, saying it would slap 10 percent tariffs on an extra $200 billion worth of Chinese imports.

The American announcement came Tuesday - days after the USA began adding 25 percent tariffs on $34 billion of Chinese goods.

"Our president is going to keep fighting for trade deals that are free and fair and reciprocal", Pence said.

However, in a statement this morning the Chinese ministry of commerce hit back, saying: "China is shocked by USA behaviour".

The Trump administration on July 6 imposed 25 per cent duties on US$34 billion in Chinese imports, the first time the president has implemented tariffs directly on Beijing after threatening to do so for months.

The U.S. government said the new tariffs are in response to Beijing's June 15 tariffs on $50 billion in U.S. exports, which were themselves in retaliation for President Trump's initial tariffs against China. "We can not turn a blind eye to China's mercantilist trade practices, but this action falls short of a strategy that will give the administration negotiating leverage with China while maintaining the long-term health and prosperity of the American economy". In Trump's first round of tariffs, China accounted for 20 percent of total US imports, meaning that substitutes were readily available.

"This act is typical trade bullying", a spokesperson for China's Ministry of Commerce said in a statement.

The Trump administration said the proposed list, which would put 10 percent tariffs on thousands of different categories of Chinese imports, is needed to increase the pressure on Beijing to change what the US calls unfair trade practices. Hong Kong's Hang Seng shed 1.3 percent to 28,311.69.

At 11.30 pm IST, the Dow Jones Industrial Average was down 141.78 points, or 0.57 per cent, at 24,777.88, while the S&P 500 was down 11.70 points, or 0.42 per cent, at 2,782.14.

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In the United States, some lawmakers and business groups criticised the latest USA move.

USA officials released a list of 6,031 Chinese product lines the administration wants to hit with the new tariffs, including hundreds of food products as well as tobacco, chemicals, coal, steel and aluminum. -China trade war, while the dollar stood stall after rallying against its peers amid the turmoil in broader markets.

In a bid to minimize tensions both diplomatically and in the financial markets, a memo from the Chinese government was distributed to reporters outlining instructions on how to cover the tariff battle with America.

In commodities, USA crude futures inched up 0.25 percent to $70.57 a barrel after tumbling 5 percent the previous day as trade tensions threatened to hurt oil demand and news that Libya would reopen its ports raised expectations of growing supply. "It will also result in retaliatory tariffs, further hurting American workers", a Chamber spokeswoman said.

'Tonight's announcement appears reckless and is not a targeted approach, ' Senate Finance Chairman Orrin Hatch said.

Analysts say a full-blown trade war with China could wound the U.S.in several ways.

The list of big decliners included exporters to China, such as Caterpillar, which fell 3.2 per cent, Boeing, down 1.9 per cent and Deere & Company, down 2.2 per cent.

However, this will be partly offset by the significant depreciation of the yuan from around 6.28 to the USA dollar in February to 6.63 on Tuesday, he added.

  • Sonia Alvarado