Published: Mon, May 06, 2019
Markets | By Otis Pena

European shares are sliding over Trump's latest tweets on China

European shares are sliding over Trump's latest tweets on China

One of the sources said Trump's decision to more than double the tariff rate on $200 billion of goods was meant to send a message to Liu to not come to the United States with more "empty offers".

China's yuan plunged more than 1 percent against the dollar Monday, the most in more than three years.

Despite Trump's claim that China pays these tariffs, they are actually paid by USA companies when they import goods.

The Goldman Sachs analysts said that while Trump's announcement "lowers the odds of a successful conclusion" to US-China trade negotiations, the firm thinks there is only a 40% chance that tariffs on China will go up on Friday.

Trump announced on Twitter Sunday that the USA would more than double tariffs on $200 billion of Chinese imports, and may slap a new 25 percent duty on another $325 billion.

These payments are partially responsible for America's great economic results, he said.

As recently as Friday, Trump had cited progress towards a deal. But he threatened to hike the tariffs on some imported Chinese goods from 10 percent to 25 percent, and he simultaneously threatened to hit the remaining untaxed Chinese imports with a new round of 25 percent tariffs. And the answer they've usually given me is that, so far, Trump has been more bark than bite: The global tariffs on imported metals and the China-specific tariffs have been negative at the margin, but they don't affect most of the economy, and they are more than offset by preexisting positive economic trends, appropriate monetary policy, and growth-boosting choices the president has made on taxes and regulation. But on Sunday, Trump said on Twitter a deal with Beijing was coming "too slowly, as they attempt to renegotiate. No!"

Carrier strike force heading to the Middle East to counter Iran threats
The US warns other countries to end trade and investment in Iran and to stop buying its oil or face punitive measures. For years, the USA maintained a carrier presence in the Persian Gulf and Middle East region.

A Chinese delegation was scheduled to come to Washington for another round of negotiations this week but the trip was said to be in flux as Beijing reacted to Trump's ultimatum.

Michael Hirson, Asia director at Eurasia Group, said Mr Trump's "unexpected resumption of tariff escalation comes just as trade talks were headed towards a final stage".

"However, today's comments hit us at a time when most were expecting some sort of market-friendly resolution to be formally announced in the next two weeks", he said.

Here is a look at the impact the US-China trade war has had so far on the two economies and the rest of the world. Hong Kong's Hang Seng dropped nearly 3%. It's possible that Mr. Trump was considering total exports from China past year, which reached $539 billion.

In this file photo taken May 1, 2019, Chinese Vice Premier Liu He, right, gestures as US Treasury Secretary Steven Mnuchin, centre, chats with his Trade Representative Robert Lighthizer, left, before they proceed to their meeting at the Diaoyutai State Guesthouse in Beijing.

Trade war fears have returned to Wall Street, wiping out a chunk of the stock market's recent surge. It was only last month that China's Unipec-the trading arm of Sinopec-received the first cargo of US crude since September. The president may love to claim that China is paying for his tariffs, but surely he has realized by now that that's not true.

Adding to the mix, North Korea carried out a weapons test, that potentially included its first ballistic missile launch since 2017, challenging Trump's bottom line in nuclear talks.

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