China to increase tariffs on certain USA products

White House economic advisor Larry Kudlow in the Roosevelt room of the White House in Washington DC

China to increase tariffs on certain USA products

The S&P 500 dropped by 2.6 percent and the Nasdaq Composite fell 3.5 percent, their worst performance so far this year.

The Russel 2000 Index of small-cap stocks fell into correction territory - dropping more than 10 percent from its August 2018 high.

The escalation, from rates of 5pc and 10pc, was announced hours after Trump warned China not to retaliate against the latest United States tariffs hike.

Global equities tumbled again on Monday, with major Wall Street stock indexes down more than 2.0%.

Last Thursday morning the Dow skidded 580 points, only to regain almost 470 by close of trading on Friday.

Talks between the United States and China on a deal to end their trade dispute ended on Friday without a breakthrough.

President Trump wrote on Twitter Saturday, "I think that China felt they were being beaten so badly in the recent negotiations that they may as well wait around for the next election, 2020, to see if they could get lucky & have a Democrat win".

The U.S. -China standoff is reducing global trade and creating uncertainty for companies deciding where to buy supplies, locate offices and build plants, paralyzing investment. You had a great deal, nearly completed, & you backed out!' Trump wrote on Twitter. Therefore, China should not retaliate-will only get worse!

Trump has accused China of reneging on commitments it made during months of trade negotiations, which Beijing has denied.

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

"The risk of a full blown trade war has materially increased", they said in a report. Also, the Tariffs can be completely avoided if you by from a non-Tariffed Country, or you buy the product inside the U.S. (the best idea). "That's Zero Tariffs. Many Tariffed companies will be leaving China for Vietnam and other such countries in Asia", he said. "China is bound to turn crisis to opportunity and use this to test its abilities, to make the country even stronger".

China's state media tried to reassure businesses and consumers that the ruling Communist Party has the means to respond. He explained that China has established contingency plans for increased American tariffs, and that the nation is well prepared to fight a drawn-out trade war.

The escalating trade war threatens to spoil an expected earnings recovery in the second half, however.

Still, the two countries have given themselves something of an escape hatch: The higher Chinese tariffs don't kick in for 2 1/2 weeks.

U.S. President Donald Trump speaks to reporters during a meeting with Hungary's Prime Minister Viktor Orban in the Oval Office at the White House in Washington, U.S., May 13, 2019. After being pressed by Fox News Sunday anchor Chris Wallace, Kudlow said that "in fact, both sides will pay". Discussing the likelihood of China hitting back at USA imports over the weekend, Larry Kudlow, Trump's top economic adviser, said: "I reckon they will".

Trump started raising tariffs last July over complaints China steals or pressures companies to hand over technology.

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