Why did Trump threaten to raise China tariffs - and what now?

Trump Ups Pressure On China Ahead Of Last Ditch Trade Talks
Trump: US to Impose Higher Tariffs on Chinese Exports
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07 May, 2019

"The 10% will go up to 25% on Friday", Trump tweeted on Sunday.

Markets tumbled in Asia on Monday after United States President Donald Trump threatened to increase tariffs by 25% on Chinese imports worth US$200 billion.

The U.S. said on Sunday it's sending an aircraft carrier strike group and bomber force to the Middle East to send an "unmistakable message" to the Iranian regime, citing "a number of troubling and escalatory indications and warnings" it suggested were linked to Tehran.

Trump imposed duties of 25 per cent on an initial US$50 billion of Chinese goods previous year and then 10 per cent on an additional $200 billion in products in September.

The US president tweeted that tariffs of 10% on certain goods would rise to 25% on Friday, and $325bn of untaxed goods could face 25% duties "shortly". Contrary to Trump's claims that tariffs have boosted the U.S. economy, analysts said they had hit growth over recent months and that an escalation could inflict greater damage.

"The atmosphere of the negotiations has changed", said a Chinese official with knowledge of the talks, and how they would proceed was being re-evaluated. Hopes for a trade deal and the US Federal Reserve backing away from raising interest rate have powered financial markets to the highest levels for six months - making them more vulnerable to bad news.

Trump imposed the 10 percent tariffs on Chinese goods in September and an increase set for January was postponed to allow negotiations to continue.

That means there's a risk China would counter any extension of US levies, though the smaller size of its imports may constrain its ability to do so. China is also said to be considering delaying a trip by its top trade negotiators to Washington after Trump's threat of steeper tariffs.

Trump threatened to ratchet up existing import tariffs of 10% on $200bn (£153bn) of Chinese goods sold in the U.S. that have been in place for nearly a year to 25%. Here are the answers to key questions about the rumbling dispute between the world's two largest economies.

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Tariffs on Chinese goods are actually paid to the United States by the companies importing the goods, and most of those companies are US -based. The Russell 2000 index of small company stocks bucked the trend, adding 0.95 points, or 0.1%, to 1,614.98.

The trade war resulted in billions of dollars of losses for both sides in 2018, hitting industries including autos, technology - and above all, agriculture, while inflicting collateral damage on export-reliant economies and companies from Japan to Germany.

He said the opposing party will not be successful if it moves forward with impeachment, based on his economic record, in spite of the worldwide stock selloff connected to his rage-tweeting at China.

There was no immediate reaction from China about Trump's announcement.

Even with the new threat of escalation, another round of trade talks between the two countries are scheduled for later this week.

In a note to clients, an analyst for Raymond James said that although Trump has in the past used the threat of more tariffs as negotiating leverage, that doesn't appear to be the case this time.

The global agricultural commodity merchant said that trading opportunities created by the U.S.

Trump took a hard line on Sunday, saying that on Friday he would impose 25% tariffs on $325 billion of Chinese products now free of tariffs and raise to 25% from 10% the existing tariffs on $200 billion of goods made in China.

Gold had earlier hit a near one-week peak of $1,285.51 an ounce as Trump's comments dented global shares and oil prices.


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