Published: Sat, August 17, 2019
Markets | By Otis Pena

U.S. trade talks with China 'very productive': Donald Trump

U.S. trade talks with China 'very productive': Donald Trump

Specifically, "cell phones, laptop computers, video game consoles, certain toys, computer monitors, and certain items of footwear and clothing" flowing from China into the United States will have an extra 10-per-cent added to their import tariffs from mid-December rather than early next month.

Trump's tariff delay coincided with recession fears in USA markets sending stocks to their biggest one-day loss since October.

The United States Trade Representative (USTR) said it has removed a number of items from the list of products that will be subject to a 10 per cent tariff as of September 1, while delayed the implementation of the tariff on others.

The Office of the US Trade Representative said on Tuesday that it is still planning to go ahead with 10 per cent tariffs on about $300 billion in Chinese imports, extending the import taxes on just about everything China ships to the United States in a dispute over Beijing's aggressive trade policies.

"As usual, China said they were going to be buying "big" from our great American Farmers".

On Thursday, Dow futures fell more than 160 points and S&P 500 futures dropped 0.7 percent while Nasdaq futures were down around 1.2 percent.

The delay seemed timed to cushion the impact of tariffs on consumer goods until after the holidays. US and Chinese officials also announced renewed trade discussions.

While dumping US Treasuries is clearly a "nuclear option" against the trade war rival, the move could also backfire on China.

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For its part, China has not backed off. Beijing announced last week it would stop buying USA agricultural products and let its currency weaken.

The markets have been in the spin cycle since President Donald Trump announced on August 1 that he would impose 10% tariffs on about $300 billion in Chinese imports, which would be on top of 25% tariffs already in place on $250 billion of imports.

Safanad CIO John Rutledge said both sides are feeling the pain of the trade war.

Trump also praised Chinese President Xi Jinping, calling him a "great leader" and saying he could quickly resolve the unrest in Hong Kong if he wanted to.

Gluskin Sheff + Associates Chief Economist and Strategist David Rosenberg said Trump blinked in a tweet Tuesday.

The two sides are set to meet again in two weeks to discuss trade.

"These developments are modestly positive, especially compared to the recent torrent of negative news, but we caution against viewing the tariff delay as anything more than an attempt to partially shield the American consumer heading into the holiday season", he wrote. "We continue to believe that a broad deal will not emerge prior to the 2020 election".

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