US stock markets have fallen for a second day following a decision by Donald Trump to impose new tariffs on a further $300bn of Chinese imports. The three main US indexes all closed the week down, following sharp falls in Europe and Asia.
The US President’s move came after the latest round of bilateral talks showed little sign of a breakthrough.
The 10% tariffs, due to take effect on 1 September, effectively tax all Chinese imports to the US.
The tariffs are likely to target a wide range of goods, from smartphones to clothing.
A spokeswoman for China’s foreign ministry warned the country would retaliate against the US for imposing duties.
“If the US implements the tariff measures, China will have to take necessary counter-measures to resolutely defend the core interests of the country and its people.”
She declined to say what this might involve, but earlier this year it China signalled that it may curb exports of rare earth minerals to the US.
China is the largest producer of rare earths which are vital to a number of US industries such as electric car manufacturing and wind turbine production.
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Mr Trump announced the tariff plan on Twitter on Thursday, while taking aim at China for not honouring promises to buy more US agricultural products at this week’s negotiations in Shanghai.
He also attacked Chinese President Xi Jinping for failing to do more to stem sales of the synthetic opioid fentanyl.
In later remarks, the US president told reporters the 10% tariffs were a short-term measure and could be lifted in stages to more than 25%.
This would be on top of the $250bn of Chinese goods that are already being taxed at 25% by the Trump administration.
Research firm Oxford Economics said: “We expect this step to make China less keen to achieve a deal and more determined to prepare itself for long-term economic tension with the US.”
(BBC)
