The Trump administration announced plans to levy tariffs on another $200 billion of Chinese goods as trade tensions escalate. The list amounts to $200 billion in products in total and also includes chemicals, steel, aluminum, TV components and many consumer products, including food and clothing.
Investors were wary of China response to the latest US tariff threat, as the country's assistant commerce minister said the proposed USA duties harm the World Trade Organization system and globalisation.
"Unfortunately the markets haven't come to grips with the current levels of trade policies and tariffs", said Art Hogan, chief market strategist at B. Riley FBR in NY.
In Beijing, Li Chenggang, assistant minister at China's Commerce Ministry, said at a forum in Beijing that the latest United States proposals interfered with the globalisation of the world economy and that China's support for a multilateral trade system would not change. His determination to renegotiate trade deals has targeted not only competitors on the world market such as China, but longtime friends and allies such as the European Union or Canada. "We believe the USA measures interfere with economic globalisation and damage the world economic order".
Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., July 11, 2018.
China Daily said in an editorial that Beijing had to stand up to Washington.
China is no stranger to trade fights, but their approach toward the U.S. is being handled differently than prior battles.
U.S. Trade Representative Robert Lighthizer said in a statement that this is "an appropriate response", as China has for years "pursued abusive trading practices with regard to intellectual property and innovation". The official added that China has warned the US that future actions would be met with "economic attacks" on American markets. That prompted fears Beijing, running out of imports for retaliation due to its lopsided trade balance with the US, might try to disrupt operations of American automakers, retailers and others that see China as a key market. "There is no justification for such action". There is no victor in a trade war.
President Trump escalated his trade war with China Tuesday, identifying an additional $200 billion in Chinese products that he intends to hit with import tariffs. China has pledged to fight back dollar-for-dollar.
"I don't want it to be detrimental to other people's interest either but certainly our interests are important", Senate Finance chairman Orrin Hatch, R-Utah, told reporters Wednesday morning.
The US Chamber of Commerce has supported Trump's domestic tax cuts and efforts to reduce regulation of businesses, but it has been critical of Trump's aggressive tariff policies.
"Tariffs on such a broad scope of products make it inconceivable that American consumers will dodge this tax increase as prices of everyday products will be forced to rise", he said. Those nations also have retaliated.
The list of big decliners included exporters to China, such as Caterpillar, which fell 3.2 per cent, Boeing, down 1.9 per cent and Deere & Company, down 2.2 per cent.
"American families are the ones being punished". But the mood on Wall Street is darkening, with analysts increasingly warning of the potential impact on financial markets as the world's two largest economies square off.
The earliest they would come into effect is September. The latest list and round of tariffs comes on the heels of two other rounds of tariffs imposing 25 percent duties on $34 billion and $16 billion worth of Chinese imports. They criticize Trump's tactics but share United States complaints about Beijing's industrial policies.