Yuan Plunges, U.S. Stock Futures Drop on Trade War: Markets Wrap


"The president is, I think, issuing a warning here, that, you know, we bent over backwards earlier, we suspended the 25% tariff to 10 and then we've left it there".

Geng made the response after U.S. President Donald Trump said he would raise tariffs on 200 billion U.S. dollars' worth of Chinese goods this week.

"For 10 months, China has been paying Tariffs to the U.S. of 25% on 50 Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods", Trump tweeted Sunday night.

It was unclear on Monday whether Chinese Vice Premier Liu He would travel as planned to Washington for talks scheduled to start on Wednesday. "It's looking very good", Trump had said.

Last week, industry sources said they believed the talks were in the endgame, but a Trump administration official said aides had told the president that significant hurdles remained.

On oil markets both main contracts were hammered more than two percent by worries that a trade war between the world's top two economies could hit demand for the commodity. Chinese officials did not respond immediately to requests for comment.

"His move injects major uncertainty into negotiations, which now face a rising risk of an extended impasse - perhaps even through the USA presidential election", Michael Hirson, head of China and Northeast Asia at the Eurasia Group, wrote in a note on Sunday.

He vowed to increase American tariffs on $200 billion of Chinese products from 10 per cent to 25 per cent within days, significantly raising the stakes before a crucial round of negotiations in Washington this week.

US companies in everything from computer chips to tractors have said President Donald Trump's trade wars, including disputes with Beijing and global steel tariffs, have had an impact on them. In the opening minutes of trading in NY, the three major USA stock indices dropped significantly. "China had previously agreed to change its laws in the text of the deal, they said", Bloomberg wrote.

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U.S. media has reported that China is now considering cancelling those talks, led by Vice-Premier Liu He, that were scheduled to resume on Wednesday.

Goldman Sachs doubled the odds of auto tariffs are coming this year to 20, and lessened the odds it gives to a free trade agreement between the U.S., Canada and Mexico.

So, as Trump is sticking it to Beijing even harder than he already has, it is perhaps fitting that he is winning approval for the move from the leader of the opposition party in the U.S. Senate.

Trump complains of a large trade deficit with China, which he views as a symbol of America's decline as a manufacturing powerhouse.

The Wall Street Journal report said that Trump's tweet had taken Beijing by surprise. China announces 10 per cent retaliatory tariffs on US$60 billion of American goods.

"For 10 months, China has been paying tariffs to the U.S. of 25 per cent on 50 billion dollars of High Tech, and 10 per cent on 200 billion dollars of other goods", Trump said in a series of tweets on Sunday.

"There is still a question of whether this is one of the famous Trump negotiation tactics, or are we really going to see some drastic increase in tariffs", said Nick Twidale, Sydney-based analyst at Rakuten Securities Australia.

As late as last Friday, the signs of signing off on a deal looked promising, according to US Treasury Secretary Steven Mnuchin.

Meanwhile, Saudi Arabia, the world's biggest oil exporter, cut the cost of all crude grades to the US for June, even as it raised prices for other regions.