Tariffs Are Much Worse for China Than US and This Is Why

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On Sunday, Trump said he will hike existing tariffs on USA imports of Chinese goods on Friday and planned new levies on other products soon. China's top trade negotiator, Vice Premier Liu He, will visit Washington on Thursday and Friday in a last-minute attempt to strike a deal and prevent the hike, according to Reuters.

Beijing's top trade negotiator, Liu He, is traveling to the United States on Thursday and Friday for high-stakes talks after Trump threatened to raise tariffs on billions in Chinese imports.

The U.S. administration said the latest tariff escalation would take effect at 12:01 a.m. Friday (0401 GMT), hiking levees on Chinese products such as internet modems and routers, printed circuit boards, vacuum cleaners and furniture.

Global equities tumbled toward five-week lows as the escalating trade fight fed worries about the world economy and investors sought the safety of bonds and the Japanese yen, which hit a six-week high against the United States dollar.

USA officials on Monday effectively canceled a six-month trade truce, accusing Chinese negotiators of backsliding on major commitments agreed to thus far in months of talks. These included measures to address the theft of United States intellectual property and trade secrets; the forced transfer of technology; competition policy; access to financial services; and currency manipulation.

World markets slump amid US-China trade tensions
Lighthizer's comments "further increased the likelihood of a tariff step up", Keith Parker, a strategist at UBS, said in a note. That also sounds grave on the surface because of trade war implications. "We're not breaking off talks at this point".

That message was reinforced by financial markets, as USA stocks fell by more than two percent for the first time in months amid concerns the renewed trade tensions could scuttle a deal.

President Donald Trump is threatening to escalate the trade war with China, as soon as this Friday. "Over the last week or so, we have seen an erosion in commitments by China".

The Chinese yuan is weakening against a basket of currencies midweek as global markets are still reeling from the incoming U.S. tariff hikes on billions in Chinese imports.

The Dow Jones Industrial Average posted its second-biggest daily percentage drop of the year, while the S&P 500 and Nasdaq registered their third-biggest percentage drops, even as the major indexes pared losses to end off their session lows.

China is eager to begin a series of trade negotiations scheduled for this week in Washington, D.C., despite reports that Beijing's government considered calling off the talks.

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Markets, which fell Tuesday, were expected to open lower Wednesday as investors continue to absorb the threat of a prolonged trade war between the world's two largest economies. Biden has been criticized in recent weeks for playing down the economic threat posed by China, arguing the U.S.is in a much stronger position than Trump credits it with.

Stephens said prices already are depressed, so "we need the China market reopened to U.S. soybean exports within weeks, not months or longer", and before the 2019 harvest begins in September. "I would say retreating from specific commitments that had already been made", said Robert E. Lighthizer, the president's chief trade negotiator.

Those new tariffs will come into force "shortly", Trump said.

The United States will increase tariffs on $200 billion worth of Chinese imports from 10 percent to 25 percent at 12:01 a.m. EDT (0401 GMT) on Friday, according to a notice posted on the Federal Register, the USA government's official journal. If the 25% tariff were extended to the rest of Chinese exports to the USA that might knock a further 0.3 percentage points off GDP.

Investors have been hoping that China's April trade data would add to signs that its economy is beginning to steady, easing worries about cooling global growth. We think China trade talks will negatively impact our universe.

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