May rebuts Trump: UK-US deal on track

Wall Street falls on China tariff threats

LONDON (Reuters) – British Prime Minister Theresa May rebutted US President Donald Trump’s warning about the future of European-American trade, saying a trade deal was possible and that work towards such a deal was making good progress.

On Monday, Trump said that the agreement by which the UK will leave the EU may make trade between Washington and London more difficult – handing ammunition to May’s critics at home who want to block the Brexit deal.

On Tuesday, May added: “We will have an independent trade policy and we will be able to do trade deals with countries around the rest of the world,” citing a political declaration on future relations with the EU agreed in Brussels on Sunday.

“As regards [to] the United States, we’ve already been talking to them about the sort of agreement that we could have in the future,” she told broadcasters. “We’ve got a working group set up which is working very well and has met many times.”

May’s spokesman said there had already been positive and productive discussions on an ambitious trade deal through joint working groups and cited public consultations on both sides of the Atlantic as signs of progress.

Asked whether May planned to hold a bilateral meeting with Trump at a G20 summit later this week, the spokesman said there were no such plans as of yet.

“It’s not something we’ve requested,” he said. “We’ve met with the president on a number of occasions in recent months.”

With May facing a difficult battle to get parliament to approve her deal, Trump’s words struck at the heart of the government’s key argument for the current Brexit accord: that it would allow Britain to strike new global trade deals without abruptly shutting off access to EU markets.

Alongside the prime minister’s words, the government published a “press rebuttal” blog explaining her arguments and setting out Britain’s plans to pursue a range of post-Brexit trade deals and play an active role on the world stage.

“After we leave the EU in March next year, we will take up our independent seat at the World Trade Organization, where we will play an active role in negotiations and be strong advocates for the rules-based global trading system,” the blog said.

Meanwhile, US stocks declined on Tuesday after Trump’s threat to move ahead with additional tariffs on Chinese goods dampened hopes of resolving the trade spat at the upcoming G20 Summit.

Ahead of the meeting in which the US and China are widely expected to enter a trade deal, Trump told The Wall Street Journal he expects to raise tariffs on $200 billion in Chinese imports to 25%, calling it “highly unlikely” that he would accept China’s request to hold off on the increase.

“The market remains in a fragile state and because of that anytime tariffs come into the picture you have worries,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

“Investors are looking for some positive news out of the G20, but until there is a concrete announcement on tariffs, investors will remain jittery.”

Apple Inc fell 2.0% in premarket trading after Trump said that tariffs could also be placed on laptops and iPhones imported from China.

Other FAANG members and technology stocks, including chip-makers which have the highest revenue exposure to China among S&P 500 companies, also declined.

Applied Materials Inc fell 1.4%, Micron Technology Inc 2.0% and Nvidia Corp 1.3%.

Micron came under added pressure after brokerage UBS lowered its price target, pointing to lower selling prices of DRAM and NAND flash memory chips.

United Technologies Corp tumbled nearly 6%, the most on the benchmark S&P 500 index. The industrial conglomerate was up in premarket trading after it announced plans to separate into three companies.

Also, European auto stocks extended losses on Tuesday after a German magazine reported that Trump could impose tariffs on imported cars from next week.

Wirtschaftswoche cited “EU sources” as saying a Department of Commerce investigation report was on Trump’s desk, adding: “Trump will possibly decide on tariffs as early as next week after the G20 meeting in Buenos Aires.”