Markets hit as US fuels trade war

THE US is forging ahead with plans to dramatically expand its trade stoush with China, sending a shudder through global markets and the Australian dollar spiralling.

The benchmark Australian share index, the ASX 200, has slipped further from the decade high it hit earlier this week amid the broad fallout.

US trade officials yesterday listed $270 billion worth of imports from China each year that will be hit with a new 10 per cent tariff. Analysts were broadly expecting the list after President Donald Trump previously flagged plans to slug a far wider range of Chinese imports. But, in a move taking analysts by surprise, US officials revealed yesterday they had already started the legal process to impose the new tariffs.

It marks a major escalation in the trade war between the world’s two biggest economies.

Analysts at investment bank UBS said, based on the rapid launch of proceedings in the US to usher in the next round of tariffs, they could be in place as soon as September.

The list covers electronics, auto parts, appliances, iron and steel, furniture, plastic goods, textiles and leather goods.

“The escalation we thought would be avoided is happening,” said UBS economist Seth Carpenter.

He said a negotiated out- come remained possible and “we can see paths to resolving the trade dispute” but added: “With tonight’s announcement, those paths have narrowed substantially”.