Investors brace portfolios for longer U.S.-China trade war

Investors brace portfolios for longer U.S.-China trade war

China's finance ministry said on Monday it planned to impose tariffs on $60 billion worth of USA goods, or a total of 5,140 products, from June 1, retaliating after US moves last week.

US President Donald Trump has increased tariffs on $200 billion worth of Chinese goods to 25 percent and ordered the start of a process to impose new duties on another $300 billion worth of items.

Such a move would send USA borrowing costs soaring, strengthen the yuan and hurt Chinese exporters.

Global equities tumbled again on Monday, with major Wall Street stock indexes down more than two percent.

In a commentary, state television said the effect of the USA tariffs on the Chinese economy was "totally controllable".

"China's adjustment on additional tariffs is a response to U.S. unilateralism and protectionism", its finance ministry said. A commentary in the Communist Party's People's Daily said "at no time will China forfeit the country's respect, and no one should expect China to swallow bitter fruit that harms its core interests". White House economic adviser Larry Kudlow said on Sunday that China needs to agree to "very strong" enforcement provisions for an eventual deal and the sticking point in negotiations was Beijing's reluctance to put into law changes that had been agreed upon.

"It's US businesses and USA consumers who pay, correct?' asked 'Fox News Sunday" host Chris Wallace.

On Friday, around 5,700 categories of Chinese-made goods bound for the USA were subject to a 25 percent tariff, up from 10 percent.

When Chinese companies pay tariffs to export products to the US, their American customers typically absorb the expense in the form of higher prices.

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Apple shares were also hit by news that the US Supreme Court gave the go-ahead for a lawsuit by consumers accusing the iPhone maker of monopolizing the market for its software applications and forcing them to overpay.

The move comes three days after the U.S. more than doubled tariffs on $200 billion of Chinese imports.

China retaliated on Monday with $60 billion in tariffs ranging from five to 25 per cent.

The prospect that the U.S. and China were spiraling into a no-holds-barred dispute that could derail the global economy has rattled investors and led to a sharp selloff on equities markets in the past week.

Trump said in another Twitter post that the trade war would not have a significant impact on United States trade.

Trump warned China not to intensify the trade dispute and urged its leaders, including President Xi Jinping, to continue to work to reach a deal.

China's Vice Premier Liu He looks on as US President Donald Trump speaks. But China has taken so advantage of the USA for so many years, that they are way ahead (Our Presidents did not do the job).

"It's no big deal". Chinese officials said they hoped that the US side would meet them halfway, describing the standoff as just a "setback".

President Trump's trade policy with China carries potential risk and reward for the 2020 election, argues Fox News senior political analyst Brit Hume. "Losing a valuable market, losing stable pricing, losing an opportunity to support our families and our communities", said Davie Stephens, president of the American Soybean Association.

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