US markets fall as Trump vows to fight China tariffs

Sarah Sanders, the White House press secretary, said that President Trump would “stand up and fight for the American worker”Alex Wong/Getty Images

James Dean, US Business Editor
The Times.

American stock markets tumbled yesterday as a trade dispute between the United States and China escalated, with the White House promising to “fight back” against $3 billion of import tariffs imposed by Beijing.

[post_ads]Sarah Sanders, the White House press secretary, said that President Trump would “stand up and fight for the American worker” after Beijing made good a threat to impose levies on imports of produce from Trump heartlands. The three main US indices were down by at least 3 per cent in the afternoon but recovered later.

Investors fear that a growing dispute between the world’s two largest economies will escalate into a global trade war. Stock markets plunged last month when Beijing unveiled the levies shortly after Mr Trump threatened $60 billion tariffs against China. In an interview on Fox News yesterday, Ms Sanders said of the president: “He’s tired of American workers being taken advantage of. He’s tired of our intellectual property being taken. The president’s going to fight back; he’s going to push back.

“We want to be able to work with them to make sure that we’re getting a good deal, and that we’re not taken advantage of any more.”

The Dow Jones industrial average dropped by 1.9 per cent to 23,644.19, with the broader S&P 500 index down by 2.23 per cent to 2,581.88.

The technology-focused Nasdaq index briefly entered correction territory but recovered to end down 2.74 per cent at 6,870.12, extending a decline that began in mid-March amid the Cambridge Analytica data scandal. Amazon shares were lower by 5.2 per cent after it suffered further criticism from Mr Trump. Shares in Facebook, Apple, Alphabet, Netflix, Intel and Tesla were also lower.
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Asian shares slipped, with Japan’s Nikkei 225 down 0.4 per cent and China’s SSE Composite index falling 0.8 per cent, and Britain’s FTSE 100 opened down 46 points in London. Markets in Germany and France were also lower. The reaction to the escalating trade tensions, however, was muted.

The Chinese levies, which affect imports of 128 American goods, were confirmed by Beijing late on Sunday evening and went into force yesterday. They are intended as retaliation for steel and aluminium tariffs imposed by the White House last month, rather than the broader $60 billion levies.

Imports of US fruit, nuts, wine, ginseng and seamless steel pipe are now subject to tariffs of 15 per cent, worth around $1 billion. A second tier of levies, worth about $2 billion, imposes 25 per cent tariffs on products including pork and aluminium.

[post_ads]Washington wants to impose levies on about 1,300 Chinese products, with 25 per cent tariffs on aerospace, information technology and machinery goods, as retaliation for alleged intellectual property theft. The White House is due to release a detailed list this week.

After announcing the tariffs last month, Beijing and Washington promised that they would engage in negotiations in a bid to avert a full-blown trade war. However, it appears that little progress has been made.

China complained to the World Trade Organisation about the US steel and aluminium tariffs a week ago, kicking off a 30-day period of negotiations under its rules. Beijing’s decision to impose the $3 billion tariffs suggests that the US has not budged. China could unveil further measures as it responds to the $60 billion US levies.

At the weekend Mr Trump threatened to pull the US out of the North American Free Trade Agreement, or Nafta, which includes Mexico and Canada.

“Mexico is doing very little, if not NOTHING, at stopping people from flowing into Mexico through their Southern Border, and then into the US,” the president said on Twitter.
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Mr Trump is attempting to reduce the huge US trade deficit as part of his “America First” policy to protect domestic manufacturing and agricultural jobs. The trade deficit with China was $375 billion last year, the largest of any of America’s trading partners. However, China was America’s third largest goods export market, amounting to $130 billion.