US stocks fall sharply as US-China trade war escalates

President Donald Trump's flip-flop comes after recent market volatility and economic uncertainty and amid a debate about whether the United States is heading for a slowdown that would imperil his reelection chances. — AFP  File

That tariff was expected to be introduced on 1 September, but less than two weeks later Mr Trump delayed that date to 15 December over concerns it might hit Christmas shoppers.

"As usual, the Fed did NOTHING!"

China's government appealed to Trump this week to compromise in deadlocked talks aimed at settling the dispute that has battered exporters on both sides and threatens to tip the global economy into recession.

China on Friday announced tariff increased on $75 billion worth of United States products in retaliation for President Donald Trump's planned increase, deepening a trade war that threatens to tip the global economy into recession.

US bond prices rose sharply as investors sought safety, sending yields lower.

"The recent rise in nationalist, patriotic behaviour in China means that it would have been impossible for the Chinese government not to react to the latest USA tariffs", Agathe Demarais, global forecasting director at The Economist Intelligence Unit, said in a statement Friday morning.

"Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the United States of America".


The US president did, however, proceed with plans to raise tariffs on some Chinese goods from September 1, which likely prompted the latest tit-for-tat measures by Beijing.

After a meeting between Trump and Chinese President Xi Jinping in July, Beijing offered to alter its plans, but talks are now deadlocked over how to enforce any deal.

"My only question is, who is our bigger enemy, Jay Powell or Chairman Xi?" He said they were "well anticipated" and would only strengthen Mr Trump's resolve.

China is also reinstituting an additional 25 per cent tariff on US-made vehicles and five per cent tariffs on auto parts that had been suspended at the beginning of the year.

Soybeans, crude oil and other energy goods face 5 percent tariffs.

After Trump gave the go-ahead earlier this month for tariffs on the almost $300 billion in Chinese imports that haven't been hit by higher duties, China halted purchases of agricultural goods and allowed the yuan to weaken.

US and Chinese negotiators are due to meet in September for a new round of trade talks but have not yet confirmed a date. It's unclear if Trump also wants to stop legal fentanyl, often used by cancer patients to treat pain, from entering the U.S.as well, which would cause an outcry from patients.

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