US trade war with China escalates and China Halts Purchases

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Global stock markets crash as US trade war with China escalates

RT,

5 August, 2019

Escalation of US-China trade tensions spooked investors as Wall Street opened deep in the red on Monday. The Dow Jones Industrial Average fell more than 580 points, or around 2 percent, after the opening bell.

The S&P 500 and the Nasdaq Composite were down 2 percent and 1.3 percent respectively.

US stocks followed the downturn on the Asian markets. Japan’s Nikkei declined 1.74 percent on trade tensions concerns, while Hong Kong's Hang Seng fell 2.85 percent and China’s Shanghai Composite closed 1.62 percent down.

European stocks also tumbled on Monday with the FTSE 100, representing the leading companies listed on the London Stock Exchange, down 2.78 percent. France's CAC 40 dropped by 2.26 percent and Germany's DAX was trading more than 5 percent lower in late afternoon trading.

Trump to impose additional 10% tariff on remaining $300 bln of Chinese imports to US from Sept 1

US President Donald Trump took to Twitter Monday to call Washington’s trade war rival China a currency manipulator after the renminbi dropped below seven per dollar for the first time in over a decade.

China’s national currency sank following Trump’s earlier threats to hit Beijing with new tariffs in less than a month amid the escalating trade standoff between the two world’s largest economies. The president was quick to say that the move will eventually backfire on China.

“It’s called ‘currency manipulation,’” he tweeted. “This is a major violation which will greatly weaken China over time!”

It’s not the first time Trump has slammed China for this, but the US Department of Treasury refrained from officially labeling Beijing a currency manipulator, placing it on the monitoring list instead. Apart from China, the list now includes Japan, South Korea, Germany, Italy, Ireland, Singapore, Malaysia, and Vietnam.

The People’s Bank of China (PBOC), which is in charge of the yuan’s exchange rate, blamed the weakening of the currency on the US’ own actions, such as unilateral, protectionist measures, as well as the expectation of additional tariffs on Chinese goods, according to Xinhua. The central bank also said the yuan has strengthened 20 percent against the dollar over the past two decades.

China Halts Purchases of US Agricultural Products, Mulls Retroactive Tariffs - Commerce Ministry

Sputnik,

5 August, 2019

Earlier, US media reported that Beijing had quietly asked state-owned enterprises to suspend further imports of US agricultural goods amid the ongoing trade war, and President Donald Trump's recent threat to slap 10 percent tariffs on another $300 billion in Chinese imports.

Chinese companies have stopped buying agricultural products made in the US, and Beijing is considering imposing tariffs on all US farm goods purchased after 3 August, China's ministry of commerce announced shortly after midnight on Tuesday, according to Reuters.

"Related Chinese companies have suspended purchases of US agricultural products," the ministry said, without specifying the value of imports subjected to the tariffs. "China's market capacity is large and it has bright prospects for importing high-quality US agricultural products," the ministry added, saying it looked forward to the US keeping its promises to create the "necessary conditions" for continued cooperation. 

The ministry's statement comes on the heels of reports by Chinese media, including Xinhua, about possible new tariffs on US agricultural goods.

Earlier, Bloomberg reported, citing informed sources, that Beijing was asking state-owned enterprises to suspend imports of US agricultural products amid spiraling trade tensions with the US, with state-run agricultural giants now said to be biding their time in anticipation of further trade talks.

Last Thursday, a day after the two economic giants wrapped up trade talks in Shanghai, President Donald Trump announced plans to slap a 10 percent tariff on $300 billion of Chinese imports starting 1 September, accusing Beijing of failing to meet its pledge to buy "large quantities" of agricultural products from the US despite agreeing to do so at the G-20 summit in Osaka, Japan in late June.

EARLIER MONDAY, THE CHINESE YUAN FELL TO ITS LOWEST LEVEL ON RECORD AGAINST THE US DOLLAR AMID CONCERNS OF ANOTHER ESCALATION IN THE TRADE WAR, WITH PRESIDENT TRUMP ACCUSING THE COUNTRY OF DELIBERATELY ENGAGING IN "CURRENCY MANIPULATION" AND SAYING THE MOVE WOULD "GREATLY WEAKEN CHINA OVER TIME."

 

US and Chinese officials are expected to continue trade talks in Washington, DC next month.

Last week, US media reported that President Trump's hard line on China has been met with dissent in his own cabinet, with an anonymous source telling the Wall Street Journal that US Trade Representative Robert Lighthizer, Treasury Secretary Steve Mnuchin, economic adviser Lawrence Kudlow and National Security Adviser John Bolton all opposed the new tariffs.

Beijing had earlier warned that it would retaliate to any new tariffs, with media reporting that the retaliation would target everything from clothing to toys to electronics. Since the trade spat began in mid-2018, Beijing has remained reluctant to escalate the conflict with Washington. However, following President Trump's tariffs announcement on Thursday, Hu Xijin, editor-in-chief of the influential Global Times newspaper, said China "will no longer give priority to controlling" the "scale" of the trade war, focusing instead on a "national strategy under a prolonged trade war."

In mid-2018, the US slapped tariffs on $50 billion in Chinese imports to try to deal with the US's staggering $400 billion+ trade deficit. China responded with tariffs against US goods, and the conflict has escalated into a series of back and forth tariff hikes. In May, the US imposed a 25 percent tariff on another $200 billion worth of Chinese products, with China pledging to hike tariffs on $60 billion in US imports. Along with the import duties, the US has resorted to blacklisting Chinese tech giant Huawei, accusing the company of installing "backdoor" access to its devices to help Chinese intelligence services spy on users worldwide. China has denied the claims.