Trump told Apple CEO iPhones will be spared from China tariffs

Daniel Fowler
June 21, 2018

The contribution of the Chinese factories in this process is estimated to be only 3.6% of the shipping price, yet US trade statistics attribute 100% of the value of imported iPhones to China and so hugely overstate the size of the U.S.

The Dow slid 42.41, or 0.2 percent, to 24,657.80. Worldwide markets suffered steeper losses.

The MSCI world equity index, which tracks shares in 47 countries, fell 0.3 per cent, nearing a seven-day low.

Beijing on Tuesday accused Donald Trump of "blackmail" and warned it would retaliate in kind after the United States president threatened to impose fresh tariffs on Chinese goods, pushing the world's two biggest economies closer to a trade war.

Investors sought safety in telecommunications, utilities, and other high-dividend stocks like Verizon, Procter & Gamble and Johnson & Johnson. Asian shares were mostly lower Monday amid worries about trade tensions as the US and China both started putting tariffs in motion.

Aerospace company Boeing dropped 3.5 percent to $342.37 and construction and mining equipment maker Caterpillar shed 3.4 percent to $143.58.

The next step will be for the Office of the U.S. Trade Representative to identify the Chinese goods to be penalized and to conduct a legal review.

In London, shares in British engines maker Rolls-Royce soared almost 10 percent.

The trade tensions have also raised concerns over a possible decline in energy demand.

US crude futures dropped 1.6 percent to $63.99 per barrel, briefly touching their lowest levels since April 10.

Meanwhile, the yuan weakened to a low of 6.4754 in afternoon trade, the weakest since January 12, while China's benchmark 10-year treasury futures jumped, as bond yields fall.

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We'll look at the countermeasures China might put in place, and what this conflict means for USA businesses that operate there. The Russell 2000 index of smaller stocks is building on the record set Tuesday, up 11 points, or 0.7 percent, to 1,705.

Beijing immediately retaliated by matching the USA levy, but Mr Trump asked officials on Monday to identify $200bn of Chinese goods to be subject to a 10% tariff.

Trump threatened to continue the economic escalation, saying that if China retaliates against the second round of tariffs, then more would be imposed.

The slump risks triggering fresh margin calls in a highly-leveraged stock market, potentially causing a downward spiral that could derail Beijing's plan to lure the listings of high-tech giants. The Shanghai Composite Index fell 3.8 percent and Hong Kong's Hang Seng lost 2.8 percent.

Oil prices headed sharply lower on expectations that OPEC and other major oil producers will announce a decision to raise production at a meeting later this week.

Benchmark 10-year notes last rose 1/32 in price to yield 2.9205 percent, from 2.924 percent late on Friday.

"That's not to say trade wars are bullish, but the S&P 500 has absorbed the threat and even body blows substantially better than China".

BEIJING-China fired back Saturday in a spiraling trade dispute with President Donald Trump by raising import duties on a US$34 billion list of American goods including soybeans, electric cars and whiskey.

In an editorial, the English language China Daily, often used by the government to get its message out to the world, said the United States had failed to honor an agreement on rebalancing trade, a reference to a deal stuck in May for China to significantly increase purchases of USA goods and services.

US long-dated Treasury yields were volatile after a hectic week when the Federal Reserve struck an upbeat tone on the USA economy.

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