China accuses Trump of ‘blackmail’ after new tariffs threat

Trump also claimed Canadians are scuffing up shoes in the USA to disguise the goods before taking them home.

Advertisement

Iron ore for delivery to China’s Qingdao port.IO62-CNO=MB dropped 3 percent to $66.45 a tonne on Tuesday, the lowest since June 5, according to Metal Bulletin. The Nasdaq composite is up 65 points, or 0.9 percent, to 7,790.

“I have a hard time accepting that any leader might do the kind of damage to his own auto industry that would happen if he were to bring in such a tariff on Canadian auto manufacturers, given the integration of the parts supply chains or the auto supply chains through the Canada-U.S. border”. If Intel makes a chip at its US plants in Oregon, Arizona or New Mexico, then sends it to China for low-level assembly work and then brings it back so it can be put into a device manufactured in the United States, the chip would get hit by the tariff.

But a top White House trade adviser reportedly said he didn’t have any knowledge of such an exception. The Philadelphia Semiconductor index .SOX fell 1.2 percent.

Front month soybean contracts fell 5.5 percent, or 50 cents a bushel, to $8.58 a bushel, and at one point fell to $8.41 a bushel, lowest for that crop since December 2008.

The world’s two biggest economies appeared increasingly headed toward open trade conflict after three rounds of high-level talks since early May failed to reach a compromise on US complaints over Chinese trade practices and a $375 billion trade deficit with Beijing.

Trump’s announcement fueled fears that economic losses, limited so far to companies hit by US or Chinese tariff hikes, might spread if the dispute chills global trade.

The White House has warned that if China goes through with its promise to retaliate against the U.S. tariffs announced last week, the United States will impose tariffs on an additional $200 billion worth of Chinese goods.

The United States and China have the world’s biggest trading relationship but official ties are increasingly strained over complaints Beijing’s technology development tactics hurt American companies.

The index, based on 30 stocks traded on the New York Stock Exchange, is mired in its longest losing streak in 15 months, with Boeing and Caterpillar – two multinationals that get at least 10 per cent of sales from China – accounting for the bulk of the losses.

The Canadian dollar averaged 75.32 cents United States, down 0.39 of a USA cent, as it continues to face the twin pressures of rising U.S. rates and trade fears, especially related to NAFTA.

“Its psychological effects, its effects in increasing uncertainty, could be very serious and we’re certainly getting later in a cycle of escalation”, former U.S. Treasury Secretary Lawrence Summers said in an interview on Bloomberg Television. Manufacturing iPhones involves nine companies, located across South Korea, Japan, Germany and the USA, and these companies ship the iPhone components to a company located in China, for assembly into final products and then exported to the United States and the rest of the world.

Futures are showing the Dow Jones industrials and S&P 500 each headed for a decline of at least 1 percent.

The standoff could escalate further yet: Trump threatened tariffs on another $200 billion in Chinese products if Beijing lashes back again. Combined, the potential tariffs on Beijing could cover $450 billion – a sum equal to 89 percent of Chinese goods imported to the United States past year.

Advertisement

For China, the White House’s response to its retaliation is unlikely to come as a surprise, yet the announcement also underscores the challenge for China.

A Japan yen note is seen in this illustration