United States stocks skid as trade war worsens with new tariff threats

Canola is an “imperfect substitute” for soybeans
Mike Drew  Postmedia

"As a result of China's retaliation and failure to change its practices, the president has ordered USTR to begin the process of imposing tariffs of 10 per cent on an additional $200 billion of Chinese imports", he said in a statement.

A Commerce Ministry statement said Beijing will use revenue from the higher import duties to "alleviate the impact on enterprises and employees" but gave no details. This marks a dramatic escalation in global tensions, causing stocks to slump and with S&P 500 futures headed for their biggest drop in two weeks.

The USTR will accept public comments and hold hearings august 20-23 before reaching a decision after august 31, according to a senior USA official who briefed reporters on condition of anonymity.

The list of new tariff targets from the US Trade Representative includes vacuum cleaners, furniture, and vehicle and bicycle parts, but US-branded smartphones and laptops were excluded.

Although China has announced to retaliate against USA tariffs, they might not be able to win the trade war over the long-term.

The comments came after President Donald Trump's administration threatened fresh tariffs on another $200 billion in Chinese goods and Beijing vowed to retaliate, the latest salvo in the escalating tariff battle.

The Trump administration released a wide-ranging list of Chinese goods it proposes be hit with tariffs, including hundreds of food products as well as tobacco, coal, chemicals and tires, and consumer electronics including television components, Reuters reports.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., July 11, 2018.

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Even so, the USA dollar hit a six-month high against the safe-haven Japanese yen as currency traders put trade worries aside and focused on Labor Department data that showed producer prices rising more than expected.

Investors had been taking the trade war in stride but Tuesday's announcement appeared to dent that optimism.

The onshore yuan tracked its offshore counterpart lower with traders closely watching the key 6.7 per dollar level as pressure mounted on the currency.

On Wednesday, the MSCI's broadest index of Asia-Pacific shares outside Japan was down about 1 percent, while the main indexes in Hong Kong and Shanghai recovered somewhat after falling more than 2 percent.

Regulators can deny or cancel licenses or tie up companies by launching tax, environmental or anti-monopoly investigations. "The outburst of large-scale mutual levying of tariffs between China and the United States will inevitably destroy Sino-US trade", Li said, adding that US policy "actually interferes with the process of economic globalization" and "damages the world economic order". He said that "must be addressed" by the trade body or others.

The U.S. economy is in what many would consider "goldilocks" mode-with unemployment at lows not seen in almost two decades and strong GDP growth.

"The U.S. behaviour represents a typical 'trade bully, ' posing a grave threat to the global value chain", Wang said.

The U.S. ambassador to the World Trade Organization is calling for the global trade body to update its rules to deal with complaints about Chinese industrial policies that he said harm other countries.

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