The threat of a growing trade conflict with China hit financial markets hard, with Beijing vowing a firm response after Trump on Monday said he would implement tariffs on an additional $200 billion USA of imports from China if Beijing went ahead with reprisals over an initial set of U.S. tariffs. Those tariffs, set to start taking effect July 6, were matched by China's threat to penalize USA exports.
Asian stocks sank on Tuesday (Jun 19) and Shanghai shares tumbled to near two-year lows as U.S. President Donald Trump threatened new tariffs on Chinese goods in an escalating tit-for-tat trade war between the world's two biggest economies.
"After the legal process is complete, these tariffs will go into effect if China refuses to change its practices, and also if it insists on going forward with the new tariffs that it has recently announced", Trump said.
The tariffs if implemented, would dramatically expand the goods facing trade measures to a range of consumer items, forcing Americans to pay more for smartphones, computers, toys and televisions among other products.
Mr Pompeo raised the trade issue directly with China last week, when he met in Beijing with President Xi Jinping and others.
"Let's make no mistake that the root cause of the problem started here in China", Harborn said, referring to Chinese industrial policies that foreign businesses have long decried as discriminatory. "Rather than altering those practices, it is now threatening United States companies, workers, and farmers who have done nothing wrong".
In U.S. Treasuries, U.S. 10-year and 30-year yields fell to three-week lows, while two-year yields slid to two-week troughs. With concerns growing on Wall Street, the Dow Jones industrial average closed down almost 300 points - more than 1 percent - on its sixth straight losing day. US companies, from Caterpillar to Qualcomm, would likely face obstruction from regulators in China, a market they rely on for an outsize share of sales. Boeing's stock shed 4.3 percent, Caterpillar 4 percent and GE 2.2 percent.
In a statement published shortly after Monday's announcement, China's Ministry of Commerce called the move "blackmail".More news: England's Harry Kane: Spurs' Mauricio Pochettino congratulated me after win
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China warned it will take "qualitative" and "quantitative" measures if the US government publishes an additional list of tariffs on its products. Trump's trade adviser Peter Navarro said, "Trade policy against China will be "eventually bullish" for US based companies and the general public, as the government is planning to bring 'structural change'". That makes US goods more expensive in other markets.
The American Chamber of Commerce had appealed to Washington to avoid a tariff hike but said Trump's threat has prompted Beijing to engage in more intensive negotiations than it had in recent years. -China Business Council. Parker suggested that such steps might include delaying or denying licenses required by US companies in China.
"We use American power, economic might and influence as a tool of economic policy", he said.
Economists have said the impact on the USA economy would be muted.
The White House is targeting China's Made in China 2025 program, which aims to restructure China's economy to focus on high-tech manufacturing.
His latest warning came after the White House revealed last week that it would impose 25% tariffs on $50 billion of Chinese products, starting on July 6. China retaliated swiftly by announcing reciprocal tariffs on USA products, ranging from soybeans and autos to seafood. But the tit-for-tat expansion of tariffs has US oil industry officials and politicians calling on the Trump administration to move cautiously. And Beijing says it would impose tariffs on $16 billion more if the United States does so, too.
The Deutsche Bank economists Brett Ryan, Peter Hooper, and Matthew Luzzetti found that the tariffs introduced by Trump could push up inflation and result in a drag on economic growth.