The China/US trade war rhetoric took a sharp downward turn late on Thursday after President Trump said he would impose an additional 10% tariff on $300 billion worth of Chinese imports starting September 1.
As is his wont, Trump tweeted: “Trade talks are continuing, and during the talks the U.S. will start, on September 1st, putting a small additional Tariff of 10% on the remaining 300 Billion Dollars of goods and products coming from China into our Country. This does not include the 250 Billion Dollars already Tariffed at 25%.”
The US President also said China was at fault for not following through on promises to buy more American agricultural products and, in a string of tweets, personally criticized Chinese President Xi Jinping for failing to do more to stem sales of the synthetic opioid fentanyl.
...buy agricultural product from the U.S. in large quantities, but did not do so. Additionally, my friend President Xi said that he would stop the sale of Fentanyl to the United States – this never happened, and many Americans continue to die! Trade talks are continuing, and...— Donald J. Trump (@realDonaldTrump) August 1, 2019
China sure to retaliate
Neil Wilson, Chief Market Analyst for Markets.com commented: "The sharp shooters have given way to the heavy artillery. The trade war just got very hot, just as we thought things were improving.”
The analyst added: “Donald Trump torpedoed the markets with a surprise decision to slap a 10% tariff on an additional $300bn in Chinese goods effective Sep 1st. China is sure to retaliate - this is real escalation.
“Risk assets have taken a pounding and gold has rallied very hard from its lows of the days. Oil has taken an absolute pounding. This has just completely taken the market off guard.
“You have to question the motives when a) the trade team have been in China this week conducing talks, and b) it coming just a day after the Fed disappointed the president by not signaling enough cuts. Trump got his cut, so he's pushing China again. It's just gaslighting.”
More trade meetings scheduled for September
US and Chinese negotiators ended two days of talks in Shanghai on Wednesday with little sign of progress, although both countries described the negotiations as constructive.
Another round of meetings between the negotiators has been scheduled for September.
The United States and China have been locked in a trade war marked by tit-for-tat tariffs since last year.
US stocks, which had been strongly higher in morning trading following a sharp sell-off on Wednesday in the wake of the Federal Reserve’s first move to cut US interest rates in over a decade, plunged into negative territory following Trump’s tweets.
With around an hour of trading to go in New York, the Dow jones Industrials Average was down over 270 points, or 1.0% at 26,590, having earlier reached a session peak of 27, 398.68.