The statement said that Trump asked the United States trade representative to determine $200 billion worth of Chinese goods that could be targeted by the 10 percent tariff. Virtually all economists agree that restricting trade has damaging economic consequences for all countries that employ such policies, but the scale and the scope of the losses are potentially huge, not just for the USA and China, but also for countries not directly involved. Jimmy Goodrich, vice president of global policy for the Semiconductor Industry Association, said chipmakers could be forced to pay tariffs on their own products simply for doing a small portion of the work in China.
The US lists have now been released and include aerospace parts and machinery, and it too has $16bn-worth of other Chinese goods “under review”.
Pompeo said, “Let’s be clear: It’s the most predatory economic government that operates against the rest of the world today”.
White House trade adviser Peter Navarro, a sharp critic of Chinese trade actions, said China has more to lose from any trade war.
China might be unable to match the US tariffs because it imports much less from the United States – $130 billion in goods past year, compared with Chinese exports to the United States of $505.5 billion.
Reflecting the weakness in the steel sector, the NYSE Arca Steel Index slumped by 2.3 percent to its lowest closing level in over two months. The Nasdaq composite is up 65 points, or 0.9 percent, to 7,790.
Germany’s DAX was up 0.1 percent to 12,692 and France’s CAC 40 added 0.2 percent to 5,400.
The three major indexes pared losses from earlier in the session.
Industrial and technology companies took some of the worst losses as investors anxious that the dispute could grow more intense and drag down global economic growth.
“There are trade frictions not only between the USA and China but also between the U.S. and its allies”. “And as a USA soybean farmer with the prices below break even now, it’s definitely not good for us, either”.
Trump accused Beijing of being unwilling to resolve the dispute over complaints it steals or pressures foreign companies to hand over technology.
However, this did not stop China from saying immediately that it would retaliate with “equal scale and equal strength”. Chips from non-Chinese wafer fabs sold to American companies that pass through those facilities likely would not be hit. Apple fell 1.9 percent to $185.16 and Facebook gave up 1.2 percent to $195.92. Soybean futures sank 3.2 percent. The euro edged down to $1.1552 from $1.1623.
CURRENCIES: The dollar inched down to 110.47 yen from 110.62 in late trading Friday.
Companies also are watching the fate of ZTE Corp. -China Business Council. He asked whether that might include delaying or denying licenses required by US companies. Search engine Baidu dropped 3.6 percent. The yield on the 10-year US Treasury bond ticked down to 2.88%.
But it is the investigation launched by the Department of Commerce – using the same national security clause – into whether tariffs should be slapped on cars and light trucks entering the USA that sparked major concern Tuesday for Conservative and New Democrat MPs.
The moves could start to meaningfully slow US growth, economists warn. China threatened to retaliate, leading Trump to seek broader penalties.
In a surprising move, Chinese smartphone marker Xiaomi said on Tuesday that it would postpone its application for a mainland share offering until after it completes a separate listing in Hong Kong.
CURRENCIES: The dollar edged down to 110.02 yen from 110.07 in late trading Tuesday. US crude fell 1.6 percent to $64.80 a barrel in NY, and Brent crude, the global standard for oil prices, fell 0.5 percent to $74.94 a barrel in London. Wall Street was poised to open higher. The Commerce Department said housing starts rose to a seasonally adjusted annual rate of 1.35 million in May, the strongest pace since July 2007. Apple was down 1.9 percent at $185.20 in afternoon trading in NY. The Russell is up nearly 10 percent this year while the S&P has risen 3 percent and the Dow is flat.
Tariff worries dragged FedEx Corp down 2.0 percent.