Trump raises stakes in China trade war
US President threatens to increase tariffs on Chinese imports ahead of G20 meeting with Xi
US President Donald Trump has said he plans to move ahead with raising tariffs on $200 billion in Chinese imports. His comments come four days ahead of his high-stakes meeting with Chinese President Xi Jinping in Argentina at the G20 summit.
Trump also repeated his threat to slap tariffs on all remaining imports from China.
“If we don’t make a deal, then I’m going to put the $267 billion additional on,” at a tariff rate of either 10 per cent or 25 per cent, Trump told the Wall Street Journal. The US has already levied duties of between 10 per cent and 25 per cent on $250 billion of Chinese goods this year.
He also said it was “highly unlikely” he would accept China’s request to hold off on the increase, which is due to take effect on January 1.
“The only deal would be China has to open up their country to competition from the United States,” Trump told the Journal.
China’s Vice-Premier Liu He told an economic conference in Hamburg yesterday that protectionist and unilateral approaches on trade would only deepen economic uncertainty, saying no country could emerge as a winner in a trade war.
“We believe that protectionist and unilateral approaches do not offer solutions to problems on trade. On the contrary, they will only bring about more economic uncertainty to the world,” Liu said.
World stock markets fought to keep a rebound alive yesterday after US President Donald Trump seemed to quash hopes of a trade truce with China, clouding what had been a bright start to the week.
European markets opened subdued, but dipped as trading progressed, with the pan-European STOXX 600 benchmark last down 0.4 per cent, pulling back from a one-week high hit in the previous session.
Asian markets put on a brave face, with Japan’s Nikkei adding 0.64 per cent and Chinese blue-chips down 0.1 per cent.
MSCI’s broadest index of Asia-Pacific shares outside Japan was last up 0.3 per cent. E-Mini futures for the S&P 500 dipped 0.3 per cent, indicating a lower open on Wall Street.
The MSCI All-Country World Index, which tracks shares in 47 countries, was flat on the day.
In an interview with the Wall Street Journal, Trump said he expects to raise tariffs on $200 billion (Dh735 billion) in Chinese imports to 25 per cent from 10 per cent currently. He said it was “highly unlikely” he would accept China’s request to hold off on the increase, planned for January 1.
The comments ran counter to recent speculation about a possible deal when Trump meets Chinese President Xi Jinping at the G20 summit in Buenos Aires later this week.
“The upcoming meeting between Trump and Xi is pivotal going into the year-end and for the outlook for global growth,” said Lee Hardman, a currency analyst at MUFG. “If there’s no breakthrough, that makes it more likely that more tariffs will be imposed, and that increases downside risks to trade.”
The news initially put tradesensitive currencies, including the Australian dollar, on the defensive, although it climbed back into positive territory in European trade. The dollar was flat against the yen at 113.585 The index that measures the dollar against a basket of other currencies was up 0.1 per cent.
If there’s no breakthrough, that makes it more likely that more tariffs will be imposed, and that increases downside risks to trade.”
Lee Hardman | Currency analyst at MUFG
Sterling weaker
Sterling was weaker across the board after Trump said on Monday the agreement allowing the United Kingdom to leave the European Union may make trade between Washington and London more difficult.
“We are seeing a greater degree of stability in sterling, but it went below recent ranges on Trump’s comments,” said Neil Mellor, currency strategist at Bank of New York Mellon in London. “Those remarks do not tell us anything we didn’t know already, but the market is trading on headlines at the moment.” The euro edged lower to $1.13235.
Shares in Apple Inc fell after hours in reaction to Trump’s comments that tariffs could also be placed on laptops and iPhones imported from China.