Published: Tue, May 14, 2019
Markets | By Otis Pena

Trump says China will be 'hurt very badly' if no trade deal

Trump says China will be 'hurt very badly' if no trade deal

"China hopes the USA will get back to the right track of bilateral trade and economic consultations and meet with China halfway".

Technology stocks are bearing the heaviest losses.

Trump later tweeted that "there will be nobody left in China to do business with".

The prospect that the United States and China were spiraling into a fiercer, more protracted dispute that could derail the global economy has rattled investors and led to a sharp selloff on equities markets in the past week.

US officials said the Chinese negotiators have been reversing themselves on commitments made in earlier trade talks.

"It's clear that there is a lot of nervousness around the U.S".

In New York, the Dow Jones industrial average was down 606.41 points at 25,335.96. Earlier, it was down 719 points. Boeing and Apple fell the most in the Dow. Both companies get a significant amount of revenue from China and stand to lose heavily if the trade war drags on.

The broader S&P 500 index fell 2.8%.

The Russell 2000 index of small company stocks lost 49.99 points, or 3.2%, to 1,523.

WASHINGTON - U.S. President Donald Trump on Monday warned China not to retaliate against a hike in tariffs he imposed last week and said U.S. consumers would not pay for any increase in duties.

The U.S. Trade Representative's office said it planned to hold a public hearing next month on the possibility of imposing duties of up to 25% on a further $300 billion worth of imports from China. The price of soybeans slid 0.8% to $8.04 a bushel.

Gold prices rose to a near three-month high.

Similarly, forecasters have warned that the USA tariff increases could set back a Chinese recovery that had appeared to be gaining traction.

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Beijing is running out of USA imports to penalize because of the lopsided trade balance between the world's two largest economies. They said that loss could widen to one percentage point if both sides extend penalties to all of each other's exports.

Meanwhile, Beijing said it still remains "cautiously optimistic" about the future of trade negotiations with the US.

China's Vice Premier Liu He looks on as US President Donald Trump speaks.

Bank stocks also fell sharply. Bank of America shed 4 per cent and JPMorgan Chase fell 2.4 per cent. Utilities were the only sector to notch a gain.

The latest talks ended with no word of progress on Friday.

Wall Street's main indexes fell more than 2 per cent on Monday after Beijing announced plans to retaliate with higher tariffs on US goods, raising fears that another round of tit-for-tat measures could push the USA economy toward recession.

"That is a tremendous amount of money that would come into our country", Mr Trump said, reiterating his belief that duties are paid by trade adversaries, not United States importers and consumers.

The selloff that began with stocks surfing at an all-time high on May 1 has now knocked nearly 5% off the S&P 500 in less than two weeks.

But that decision is up to the Federal Reserve, and its policy makers are likely to stand pat after a first quarter in which gross domestic product surged ahead at a 3.2-per-cent annualized clip, the best start to a year since 2015. However, the fallout from the trade war could spoil an expected earnings recovery in the second half.

Mr Trump said a process had begun to place the full 25% tariff on a further $325bn of Chinese goods, causing concern over the impact the ongoing tit-for-tat trade spat between the world's two largest economies might have on global growth.

Elsewhere in the market, generic drug developers slumped after many of them were accused of artificially inflating and manipulating prices.

Teva, which was specifically mentioned, sank 14.8%.

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