Stocks tumble as markets brace for Trump's next round of tariffs

Daniel Fowler
September 18, 2018

'Further, if China takes retaliatory action against our farmers or other industries, we will immediately pursue phase three, which is tariffs on approximately $267 billion of additional imports, ' a statement from Trump warned.

Overnight, president Donald Trump announced a new 10% tariff of $200bn on Chinese goods arriving in the United States from next week.

Earlier, China vowed that it will not play defense in the escalating trade dispute, adding further fuel to tensions as a new list of items subject to tariffs, including technology and consumer goods, was anticipated from Washington.

U.S. President Donald Trump's expected announcement of new tariffs on $200 billion in Chinese goods drew an immediate threat of reprisals from Beijing.

Mr Trump told China any retaliatory act against United States farmers or industry will trigger "phase three".

"I will say right here on China, we are ready to negotiate and talk with China anytime that they are ready for serious and substantive negotiations towards free trade to reduce tariffs and non-tariff barriers".

Trump said the tariffs aim to force a change in Chinese trade policies that he said posed "a grave threat to the long-term health and prosperity of the United States economy".

Tariffs of 10 percent will be imposed on $200 billion (€171 billion) worth of imports from September 24, rising to 25 percent on January 1.

Trump hits China with tariffs on another $200b in goods
Washington has already imposed 25 percent duties on $50 billion of Chinese goods over what it alleges are unfair trade practices. Traders work on the floor of the New York Stock Exchange shortly after the opening bell in New York, U.S., September 11, 2018.

The latest round of imports will face 10 per cent tariffs through the end of the year, and then the rate will jump to 25 per cent. But if the administration enacts the additional tariffs it would engulf all remaining USA imports from China and Apple products like the iPhone and its competitors would not likely be spared.

In the letter sent earlier this month, Apple said a range of its products would be hit and warned that the proposed tariffs, which could lead to higher production costs, higher consumer prices and "lower overall USA economic growth, and other unintended economic consequences". And in a victory for Apple Inc., the administration removed smart watches and some other consumer electronics products.

The two-phase structure of the planned import tariff means that US consumers will only feel the effects of the change after the country's November midterm elections, strategists at UBS 's Chief Investment Office said in a note.

That could soften the blow to USA consumers and manufacturers among others ahead of key U.S. congressional elections in November. As counterintuitive as it might seem, the president sees this fact as ultimately helping USA workers.

"Apple prices may increase because of the massive Tariffs we may be imposing on China - but there is an easy solution where there would be ZERO tax, and indeed a tax incentive".

"After a thorough study, the USTR concluded that China is engaged in numerous unfair policies and practices relating to United States technology and intellectual property - such as forcing United States companies to transfer technology to Chinese counterparts", Monday's statement read.

The U.S. had already imposed tariffs on $50 billion in Chinese imports.

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