Trump ropes Federal Reserve into US-China trade war

US targets $300B of Chinese goods for new tariff hikes

Global stock markets have steadied amid hopes that the U.S. and China will resume talks next month, following an escalation in their trade war. "You can also buy from a non-Tariffed country instead of China", he continued. Last year, China reported its slowest economic growth since 1990, and the Financial Times reports that many experts "believe its official data understates the true extent of the slowdown".

Mr Trump had moved to reassure markets on Tuesday, saying the United States has "a dialogue ongoing" with China.

However, with tariffs on US$200 billion of Chinese goods having risen to 25 per cent and further 25 per cent tariff to be applied to most of the remaining Chinese exports to America, valued at around US$300 billion, it remains to be seen what tools Beijing has in its arsenal to defend its economy.

It didn't take long before he launched a Section 301 investigation against China over its trade, investment and intellectual property policies and practices. Over the past week, the world's two largest economies have exchanged tit-for-tat tariffs, as it looked like chances of a near-term trade deal - which had appeared to be growing only two weeks ago - have dwindled.

The day prior it suffered a major sell-off, however, after Trump insisted he's willing to wait the Chinese out and hit them with additional tariffs.

Last week, President Trump increased tariffs on about $200 billion worth of Chinese imports to 25% from 10%, and China retaliated with its own tariffs on $60 billion worth of US goods effective June 1.

"We're having a little squabble with China because we've been treated very unfairly for many, many decades", Trump said, referring to USA complaints about Chinese intellectual property and subsidy practices. Trump wrote. It did not escape Trump critics that his proposal to redistribute income with tariffs on incoming goods and subsiding farmers with it was tantamount to the very idea he was panning Democrats for: Socialism.

"We are in a much better position now than any deal we could have made".

Beijing is running out of US imports to penalize due to their lopsided trade balance.

"Our great Patriot Farmers will be one of the biggest beneficiaries of what is happening now". "We're embedded together economically".

"They know that China has to live by the rules of global trade just like the United States and nearly the rest of the world does".

US 10-year Treasury yields also rose away from Monday's six-week lows, rising back above shorter-dated three-month bill yields after the yield curve inverted on Monday for the second time in less than a week.

Trump past year pledged up to $12 billion in aid to farmers - chiefly soybean, wheat and corn growers, and those who raise pigs.

He also said he had not decided whether to go ahead with threatened tariffs on another $325bn of Chinese imports.

"With the scale of stimulus likely to remain smaller than in previous downturns, we don't anticipate a strong recovery", he said.

Trump warned Xi on Twitter that China "will be hurt very badly" if it doesn't agree to a trade deal. The country was responding to the latest round of bilateral US-Chinese trade negotiations which ended last week in Washington without any resolution and instead resulted in the United States introducing more tariffs on Chinese goods.

In another tweet on May 13, Rubio acknowledged that the trade war will cause economic pain, "but so too will returning to the status quo".



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