World markets slump amid US-China trade tensions

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In tweets sent on Sunday afternoon, local time, Trump said he would increase the current 10 per cent tariff on US$200 billion (NZ$303 billion) worth of Chinese goods to 25 per cent on Friday.

"We've got to do everything we can to build up the American economy and stop sitting here and trying to build up the Chinese economy", he said.

Stephens, a grower from Clinton, Kentucky, said "farmers are in a desperate situation".

"You see the tariffs we're doing?"

Stock markets in the US, Europe and Asia plunged after US President Donald J. Trump threatened new tariffs on China and putting a rumoured trade deal in doubt.

"The financial and emotional toll on United States soybean farmers can not be ignored".

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Trump, however, said on Wednesday that real reason for the pullback was hope among the Chinese that they could hold off on negotiations on the chance that a Democrat wins the 2020 presidential election.

"China supplies the United States with several chemicals which are not available anywhere else and which are critical inputs to U.S. manufacturing", he said, noting that China is also is the number three USA export market.

President Donald Trump said on Wednesday that China "broke the deal" in trade talks with Washington and would face stiff tariffs if no agreement is reached.

"We still hope the United States can work hard with China to meet each other halfway, and strive to reach a mutually beneficial, win-win agreement on the basis of mutual respect".

"We'll see, but I am very happy with over $100 Billion a year in Tariffs filling U.S. coffers".

Shares initially bounced back slightly on Tuesday before sinking into negative territory in the afternoon on more pessimism. "If Liu He goes to the United States according to the original plan, it implies that ... a deal will happen soon", Larry Hu and Irene Wu of consulting firm Macquarie Capital Ltd. said in a note on Monday.

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News that China appeared to be backtracking off its verbal commitments was delivered to Trump in a briefing at the end of last week from his chief trade negotiator Robert Lighthizer, who cast the developments as a disappointing move after what had appeared to be weeks of progress.

Lighthizer's comments "further increased the likelihood of a tariff step up", Keith Parker, a strategist at UBS, said in a note.

Treasury Secretary Steven Mnuchin declined to give specifics but said the USA side had originally hoped to conclude a deal either way this week.

Mr Trump, in a post on Twitter last Sunday, said he planned to raise tariffs tomorrow on US$200 billion (S$272 billion) worth of Chinese goods to 25 per cent from 10 per cent. That also sounds grave on the surface because of trade war implications.

"We're not breaking off talks at this point". The sources told Reuters the extent of the setbacks in the revised text were serious and that Trump's response was not merely a negotiating strategy. That hike triggered a brief slowdown in the Chinese economy, prompting fears of a global economic downturn, but the renewed talks between the world's two largest economies has steadied markets in recent months.

"The market was just very complacent thinking a deal would happen", said Sandy Villere, portfolio manager at Villere & Co.

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