Major Stock Indexes Plunge As US Threatens Higher Tariffs On Chinese Goods

Major Stock Indexes Plunge As US Threatens Higher Tariffs On Chinese Goods

It was confirmed yesterday that Chinese Vice Premier Liu He will still visit the USA this week for trade talks, despite the recent accusations from the U.S. officials.

The world's two largest economies have already raised tariffs on hundreds of billions of dollars of each other's goods in their dispute over USA complaints about Chinese technology ambitions.

The Chinese government on Wednesday threatened to retaliate if President Donald Trump follows through on his plan to ratchet up tariffs on Friday, just as the two countries try to finalize a trade deal. China's top trade negotiator, Vice Premier Liu He, will visit Washington on Thursday and Friday in a last-minute attempt to strike a deal and prevent the hike, according to Reuters.

U.S. President Donald Trump said on Wednesday he would be happy to keep tariffs on Chinese imports in place, adding that China was mistaken if it hoped to delay a trade deal with the United States until a Democrat controlled the White House.

At a briefing with reporters Monday afternoon, U.S. Trade Representative Robert Lighthizer said China was "retreating from specific commitments that had already been made".

Some in the USA and China speculated on Sunday and Monday that Trump's Sunday tweets might be just an empty threat meant to give US negotiators additional leverage in the talks. China has allegedly rowed back on promises to change its domestic laws in areas such as intellectual property and forced technology transfers.

Beijing's top trade negotiator, Liu He, is traveling to the US on Thursday and Friday for high-stakes talks. China has threatened to retaliate against any step up in United States action.

"With depressed prices and unsold stocks forecast to double before the 2019 harvest begins in September, we need the China market reopened to USA soybean exports within weeks, not months or longer".

The benchmark S&P 500 lost 1.7 per cent to 2,884, while the tech-heavy Nasdaq fell 2 per cent to 7,964 - their third-largest percentage drops of 2019.

On Wednesday morning, USA stock market indexes were mostly weaker again, pointing to a third straight day of losses on Wall Street.

Trump vowed Sunday to ratchet up existing tariffs this week and also to extend the 25 percent punitive duties to the remaining $350 billion in Chinese goods imported into the country each year. China has just informed us that they (Vice-Premier) are now coming to the U.S. to make a deal.

Trump's latest salvo "decimated the "Goldilocks" environment for equity traders, where subdued geopolitical risks, steady Fed policy and low inflation were only hinting on more gains for the global indices", said Konstantinos Anthis, head of research at ADSS.

Washington has already imposed tariffs on $250 billion worth of Chinese imports, while Beijing retaliated with levies on $110 billion in US goods.

Trump's unexpected Sunday tweets sent the market reeling Monday.

Analysts say China will be reluctant to make many of these changes, which could undermine the Communist Party's political power. "The effects on the United States would probably be minimal, due to the lesser importance of trade with China and the fact that China would struggle to retaliate as it is running out of imports to tax".

The tensions have renewed fears that the trade war could spill over into the global economy.

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