Published: Tue, October 30, 2018
Markets | By Otis Pena

China Trade War Rhetoric Weighing Further on the Chinese Yuan (CNH)

China Trade War Rhetoric Weighing Further on the Chinese Yuan (CNH)

The US is preparing to announce by early December tariffs on all remaining Chinese imports if talks next month between presidents Donald Trump and Xi Jinping fail to ease the US-China trade war, three people familiar with the matter said.

"We have expected that they will try a whole range of things to encourage us to back down", said a senior administration official.

"I can make a deal right now, I just say they are not ready", Trump said in the interview.

The comments immediately soothed market fears that the trade confrontation between the world's two biggest economies would become more acute, with Asian markets mostly gaining on Tuesday.

"Levies on such a wide range of goods would deal a tangible blow to China's growth", said Tom Orlik and Chang Shu.

"I think that we will make a great deal with China and it has to be great, because they've drained our country", Trump told FOX News Channel's "The Ingraham Angle" on Monday. The S&P 500 is now flat.

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China and the United States are now engaged in a trade row which was triggered by the U.S. slapping 25- and 10-percent tariffs on steel and aluminum imports, respectively, from China in April.

Trump has already imposed tariffs on $250bn worth of Chinese goods, and China responded with retaliatory duties on $110bn worth of U.S. goods.

Fears about the escalating trade war between China and the United States has cast a shadow over markets and economic growth worldwide - and China's growth and markets in particular have taken a hard hit. USDCNH has weakened ever since trade wars started earlier this year, with the weaker CNH negating some of the effects of US-imposed tariffs.

The kiwi has been battered by the US-China trade tensions as China is New Zealand's largest trading partner.

The story added to skittishness across trading floors, where investors are already fretting over a number of issues including geopolitical tensions, rising USA interest rates, slowing growth, Brexit and Italy's budget standoff with the EU. "We're in a trade dispute -I want to use that word because it's a nice, soft word - but we're going to win", Trump said on Saturday at an event in Indiana.

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