Dow Tumbles 300 Points As Trump Escalates Trade War With China


On Tuesday, China's commerce ministry said the country would take "qualitative" and "quantitative" measures, and "fight back firmly" against additional tariff measures by the United States government.

Security guards walk in front of containers at the Yangshan Deep Water Port in Shanghai, China on April 24, 2018.

President Donald Trump announced Monday that he was considering a 10 percent tariff on $200 billion in additional imports from China.

China accused the United States on Tuesday of "extreme pressure and blackmailing" and vowed to retaliate after U.S. Trump threatened to impose a 10 percent tariff on $200 billion of Chinese goods in addition to $50 billion of import duties that had already been announced.

A Commerce Ministry statement criticized the US measures as "extreme pressure and blackmail". Which is to say: Beijing is using violations of worldwide trade rules in a bid to reshape the global economy in a manner that will weaken the West relative to China.

"This latest action by China clearly indicates its determination to keep the United States at a permanent and unfair disadvantage", Trump said.

"If China increases its tariffs yet again, we will meet that action by pursuing additional tariffs on another $200 billion of goods", Trump said in a statement.

Tensions were also stoked by the US Senate's decision Monday to reimpose a seven-year ban on sales of US high-tech chips to Chinese telecom firm ZTE, which had narrowly escaped collapse under a compromise deal announced by the Trump administration.

- Trader confidence has been hit by the escalating trade war between the United States and China.

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Trump has taken direct aim at Beijing's industrial policies by targeting tariffs at goods the White House benefit from them.

"In terms of tariff imposition, China will run out of ammunition faster, since it imported only $130 billion of goods from the U.S. in 2017", Kuijs wrote Tuesday.

"I have to point out that USA remarks confused right with wrong and made irresponsible accusations against China to cover up its unilateral and protectionist moves", Chinese Foreign Ministry spokesman Geng Shuang said when asked to comment on Pompeo's statement.

The proposed measures caused upset on global stock markets on Tuesday, initially weakening both the United States dollar and the Chinese yuan.

On Friday, Mr Trump said he was pushing ahead with a 25% tariff on $50 billion worth of Chinese products, prompting Beijing to respond in kind.

"Aircraft, chips and energy imported from the USA could be subject to [punitive tariffs]" he said.

A new report from Scotiabank spells out four potential scenarios for Canada if trade tensions with the USA continue to escalate, but one of the bank's top economists is anticipating a more benign outcome. "This is unacceptable", Trump said.

By contrast, Palmer noted, the United States exported only about $130bn worth of products to China in 2017. "These negative repercussions span a broad spectrum, extending from the risk of domestic political backlash, to the risk of decreased Chinese cooperation on North Korea, to the outside possibility that China will move to test USA mettle with regional security alliances".

It's the latest escalation in a dispute that Wall Street fears could escalate into a full-blown trade war.