Aussie dollar caught in trade war tit-for-tat

THE Australian dollar is being caught in the crossfire of an escalating US-China trade war, sinking to its lowest level in more than year.

And investors in Hong Kong and Shanghai have led a sell-off across many Asian markets after US President Donald Trump threatened to slug Chinese imports with yet further tariffs and Beijing warned of countermeasures.

Within minutes of the Mr Trump’s warning yesterday, the Australian dollar skidded to US73.94c. It then fell further in afternoon trade and was last night buying US73.62c.

The slide in Asian stocks came amid fresh tit-for-tat threats in the US-China trade stoush. Investors were already on edge after the world’s top two economies last Friday formalised new tariff plans and Mr Trump pushed ahead with his protectionist agenda.

Last week, the US announced a 25 per cent tariff on up to $US50 billion ($67.6 billion) a year in Chinese imports.

China retaliated by raising import duties on $US34 billion worth of American goods, including soybeans, electric cars and whiskey.

Trump also has slapped tariffs on steel and aluminium imports from Canada, Mexico and European allies.

Yesterday, Mr Trump said he had asked officials to identify a further $US200 billion a year worth of Chinese imports.

He added that if Beijing retaliated, he would then look to apply tariffs to yet another $US200 billion worth of imports a year.

“The trade relationship between the United States and China must be much more equitable,” he said.

The Australian share market edged lower as the mining heavyweights were hit by falls in iron ore prices.

The ASX200 was down 2 points, or 0.03 per cent, to 6102.1 points, while the All Ordinaries slipped 3.9 points, or 0.06 per cent, at 6208.9.