U.S. imposes new $200bn tariffs on China

Donald Trump

Donald Trump

This has raised concerns that China could retaliate with non-tariff trade measures.

"Ongoing uncertainty about trade policy had led to volatility in the prices of some commodities", the board's minutes said.

Alex Feinberg, Director of Partnerships at OKcoin, explains why the global trade war could hamper American innovation.

China has vowed to retaliate against new USA tariffs, with state-run media arguing for an aggressive "counterattack". Steel prices are up more than 10 per cent since February, the month before Trump announced his long-awaited tariffs of 25 per cent on steel and 10 per cent on aluminum, from a wide swath of trading partners.

In addition to being much larger than previous rounds of tariffs, the new set zeroes in on different targets. China has said it's ready to impose retaliatory tariffs on USA goods.

The tough talk follows reports China is deliberately reducing exports to the USA by slowing down customs approvals and stepping up environmental and other inspections.

The two countries have been embroiled for months in a trade conflict that has threatened to hurt consumers in both countries.

US President Donald Trump (left) warned Iranian President Hassan Rouhani not to threaten the United States, during their war of words in 2018.

Jim O'Sullivan, chief economist for High-Frequency Economics, said financial markets would likely adopt a "could have been worse" reaction to the latest tariffs.

"If the United States launches any new tariff measures, China will have to take countermeasures to firmly ensure our legitimate rights and interests", Foreign Ministry spokesman Geng Shuang told reporters ahead of the expected announcement.

The World Trade Organization, to which both the US and China are parties, has a complaints process that can allow the imposition of tariffs if the party claiming unfair trade proves its point, and the offending nation doesn't change its policies.

The industrial-skewed Dow Jones index was down 92 points, or 0.4 per cent, to 26,062.

At the White House on Monday, he said the USA trade gap with China-the net between imported and exported goods between the two countries-was too large, and "We can't do that anymore".

"As President, it is my duty to protect the interests of working men and women, farmers, ranchers, businesses, and our country itself".

Countries such as New Zealand that stood up for "dependable rules-based systems" needed to engage with the Trump administration more, he said.

Earlier in the day the President tweeted: "Tariffs have put the USA in a very strong bargaining position, with Billions of Dollars, and Jobs, flowing into our Country - and yet cost increases have thus far been nearly unnoticeable".

The message will be especially poignant to Canada, with which the U.S.is now engaged in a trade stand-off, and Europe, a heavy bearer of steep steel and aluminum tariffs introduced earlier in the year by the president.

Word of Trump's latest tariff plans has weighed on Wall Street since last week, with markets in a wait-and-see mode.

The U.S. and China are talking past each other and efforts to mediate are going nowhere.

"With a narrowing focus on the USA midterm elections (Nov 6) and United States politics - as well as fast-money investors holding substantial aggregate long USD positions - we think the market narrative over the next few months could well transition from "default to the dollar" to "ditch the dollar", says Viraj Patel, an FX strategist at ING Group.

The US Treasury had invited Chinese officials for more talks to try to resolve trade differences last week but the prospect of negotiation seems bleak now.

"The Liberal-National government will ensure we continue to have the backs of Australian industry".

U.S. companies have already said they are anxious about the effect of higher costs on their businesses.

"The biggest risk to New Zealand lies in the undermining of global rules-based agreements", he said.

Hasn't the U.S. already imposed tariffs? A USTR spokesman did not respond to queries about the tariffs.

Turkey has in turn hiked tariffs on imports of several United States products such as rice, alcohol, leaf tobacco, cosmetics and cars.

"By choosing to unilaterally raise taxes on Americans, the cost of running a farm, factory or business will grow".

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