Dow Jones falls 473 points as US-China trade fears escalate

Dow Jones falls 473 points as US-China trade fears escalate

Dow Jones falls 473 points as US-China trade fears escalate

Washington has already imposed tariffs on $250 billion worth of Chinese imports, while Beijing retaliated with levies on $110 billion in USA goods.

Trump recently hinted that Chinese President Xi Jinping could visit the U.S. in June setting off speculation that both countries could work out a trade deal by next month.

The ramping up of trade tensions between the world's two biggest economies has dragged on markets this week. "Beijing will have no choice but to implement countermeasures".

Despite the tougher USA rhetoric, China said Tuesday its top trade negotiator, Vice Premier Liu He, would lead Beijing's delegation to the talks in Washington on Thursday and Friday, a day later than originally scheduled.

Data released Wednesday morning in China suggested that its trade surplus in April stood at $13.84 billion, well below expectations.

"Guess what, that's not going to happen!" he continued.

The diplomatic cable from Beijing arrived in Washington late on Friday night, with systematic edits to a almost 150-page draft trade agreement that would blow up months of negotiations between the world's two largest economies, according to three USA government sources and three private sector sources briefed on the talks.

The Chinese Commerce Ministry announced Wednesday that Beijing will retaliate if USA tariffs on $200 billion of Chinese goods is hiked to 25% from 10%.

China's Commerce Ministry warned of unspecified retaliation should Trump not back down.

Global markets tumbled mightily following Trump's weekend threat, as well as concerns it could lead China to call off negotiations.

Investors and analysts questioned whether Trump's tweet was a negotiating ploy to wring more concessions from China.

European and Asian equities and US futures slumped on Wednesday as traders, fearing a collapse of US-China trade negotiations, followed up Wall Street's rout on Tuesday and sold off riskier assets.

The president confirmed that Vice Premier Liu He was coming to Washington as part of the delegation.

The S&P 500 Index traded little changed early Wednesday, after declining more than 2 percent in the two days after Trump announced the tariff escalation.

"We're not breaking off talks at this point". But on Sunday he increased tariffs on $200 billion worth of goods from 10% to 25% and said he might also apply the 25% tariff to another $325 billion worth of goods.

In the same four-month period, imports of American goods plunged 30.4% following Chinese retaliatory duties and orders to buyers to find other suppliers.

While these numbers sound massive, it's important to consider that the US gross domestic product is now running close to $21 trillion on an annualized basis.

Trump took at shot at his Democratic challengers, singling out former Vice President Joe Biden, saying China would prefer to negotiate with them. China's imports from the U.S. fell almost 26 per cent while exports to the United States fell just over 13 per cent.

Ed Morrissey pointed out at HotAir that it's quite unlikely that Chinese officials are truly willing to take the kind of financial hit that a soured trade relationship with the US until January 2021 would entail and that they've just grossly misread who they're dealing with.

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