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US Markets Tank as Beijing Announces ‘Tit for Tat’ Duties on US Exports

Trade war escalates as Donald Trump vows a quick response to China's plans for new tariffs, while ordering American companies to leave the country. Beijing says it’s a ‘forced’ response to Trump’s tariff threat on August 15.
US-China-Trade-War

Washington/Beijing: The Dow Jones Industrial Average plunged more than 600 points on Friday after the latest escalation in the trade war between the US and China rattled investors. The broad sell-off sent the S&P 500 to its fourth straight weekly loss.

Stocks tumbled after President Donald Trump responded angrily on Twitter following China's announcement of 10% new tariffs on $75 billion worth of US exports in retaliation to President Trump's threat to impose new tariffs on $300 billion worth of Chinese imports.

In a tweet, Trump also "hereby ordered" US companies with operations in China to consider moving them to other countries — including the US.

In Beijing, China's Customs Tariff Commission said the country would resume imposing additional tariffs of 25% or 5% on American-made vehicles and auto parts starting from 12:01 p.m December 15, another announcement said.

The US government had announced on August 15 that it would impose additional tariffs of 10% on Chinese goods worth about $300 billion effective on September 1 and December 15, respectively, in two batches.

The US move has led to a further escalation of bilateral trade frictions, greatly damaging the interests of China, the US and other countries, and also gravely threatening the multilateral trading system and free trade principles, a statement by the China Customs Tariff Commission said, as per Xinhua news agency.

The commission will continue with the work of exempting certain items from additional tariffs.

China's imposition of additional tariffs is a forced response to the US unilateralism and trade protectionism, it said.

China reiterates once again that cooperation is the only correct choice for China and the US and that only a win-win situation will lead to a better future.

"We hope China and the United States will resolve differences in a manner acceptable to both sides on the premise of mutual respect, equality, good faith, and consistency of words and deeds," the statement said.

In Washington, Trump said in a statement to the White House press corp that: "Starting on October 1st, the 250 Billion (US) Dollars of goods and products from China, currently being taxed at 25 per cent, will be taxed at 30 per cent.”

“Additionally, the remaining 300 BILLION (US) DOLLARS of goods and products from China, that was being taxed from September 1st at 10 per cent, will now be taxed at 15 per cent. Thank you for your attention to this matter!” said the US president in his unusual statement, portions of which were in capital letters.

In his statement, which was mainly against China, Trump also issued a warning to other countries as well.

"For many years China (and many other countries) has been taking advantage of the United States on Trade, Intellectual Property Theft, and much more,” he said.

“Our Country has been losing HUNDREDS OF BILLIONS OF DOLLARS a year to China, with no end in sight. Sadly, past Administrations have allowed China to get so far ahead of Fair and Balanced Trade that it has become a great burden to the American Taxpayer,” Trump said.

“As President, I can no longer allow this to happen! In the spirit of achieving Fair Trade, we must Balance this very unfair Trading Relationship. China should not have put new Tariffs on 75 BILLION DOLLARS of United States product (politically motivated!),” he said.

G-7 Summit

Trump's statement came hours before he was scheduled to leave for France to attend the G7 Summit. Other members of grouping are Canada, France, Germany, Italy, Japan, and United Kingdom.

Prime Minister Narendra Modi is attending the G7 summit as a special guest at the invitation of the French President Emanuel Macron. Trump and Modi are scheduled to hold meetings on the sidelines of the G-7 summit.

“They (Modi and Trump) will look for solutions on the trade front. The US is looking to India to reduce tariffs and open its markets,” a senior administration official told reporters on the eve of his departure. PTI LKJ

US Stocks Tumble

The Dow Jones Industrial Average plunged more than 600 points Friday after the latest escalation in the trade war between the US and China rattled investors. The broad sell-off sent the S&P 500 to its fourth straight weekly loss.

Stocks tumbled after President Donald Trump responded angrily on Twitter following China's announcement of new tariffs on US goods.

Trump announcements are likely to influence stock markets in Asia when trading opens there Monday.

Friday's developments mark the latest escalation of an ongoing trade dispute between Washington and Beijing that has given investors whiplash as they try to assess its potential impact on the global economy.

The tweets from Trump around 11 a.m ignited a wave of selling as investors fled stocks in favour of US government bonds, pushing yields higher. The price of gold also rose.

"The market is spooked by the escalation in the trade war," said Janet Johnston, portfolio manager at TrimTabs Asset Management.

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