Trump repeated a threat on Thursday to impose new 25 per cent tariffs on US$325 billion of Chinese imports, which aren't now covered, saying that his administration has started preparing the paperwork. USA and Chinese negotiators are to resume trade talks Thursday.
US President Donald Trump said on Thursday he had received a "beautiful letter" from his Chinese counterpart Xi Jinping and there is still a chance to salvage trade negotiations to resolve a year-long dispute. "Let's work together and see if we can get something done", he said, adding that he and Xi likely would speak by telephone later.
"China's real economy performance has improved significantly in recent months.China's current macroeconomic and policy environment should help the market improve its resilience to new external shocks", he said. China vowed to retaliate if the increased tariffs go through.
In overseas markets on Thursday, South Korea's Kospi index skidded 3%, while the Hang Seng in Hong Kong lost 2.4% and Japan's Nikkei 225 fell 0.9%.
Chinese Vice Premier Liu He (L) shakes hands with US Trade Representative Robert Lighthizer (R) alongside US Treasury Secretary Steven Mnuchin (C) as Liu leaves the Office of the United States Trade Representative after trade negotiations in Washington, DC, May 10, 2019.
"China is not afraid of conflict", said the Global Times, a newspaper published by the ruling Communist party's People's Daily, which is known for its nationalist tone.
On Wall Street, the Dow Jones industrials dropped 0.5%.
The two countries are sparring over United States allegations that China steals technology and pressures American companies into handing over trade secrets, part of an aggressive campaign to turn Chinese companies into world leaders in robotics, electric cars and other advanced industries.
China has disputed Trump's characterization that the country reneged.
"Without the legal change, U.S. officials will have more difficulty - almost impossible - selling the deal", said Coflan.
With the trade war entering its second year, the U.S. and China are wrestling with a long list of hot-button issues.
That would hit 100% of the toys and sports equipment imported from China to the United States, as well as 93% of the footwear and 91% of textiles and clothing, according to an analysis by the Peterson Institute for International Economics.
According to a Goldman Sachs report, "Services stocks have less foreign input costs that might be subject to tariffs and are also less exposed to potential trade retaliation given they have less non-U.S. sales exposure than goods companies".
United States officials say they got an inkling of China's second thoughts about prior commitments in talks last week in Beijing, but that the backsliding became even more apparent in exchanges over the weekend.
The 150-page, seven-chapter draft of the trade deal addresses complex issues such as ending Beijing's practice of forced technology transfers, implementing better protections for U.S. intellectual property, and increasing market access for USA firms.
"We're getting very close to a deal then they started to renegotiate the deal". The deficit is the difference between what America sells to the rest of the world and what it imports.
He said if the two sides didn't make a deal, there was "nothing wrong with taking in more than $US100b a year". "Try looking at all of the tariffs that China's been paying us for the last eight months". It said Beijing had measures in place to minimise losses for its companies.
Despite such bluster, factories in Chinese coastal regions that serve the United States market have been devastated.
Data released Thursday showed the USA goods trade deficit with China shrank to its smallest level in five years in March, which could further embolden Trump as he escalates the trade war with Beijing. Imports of American goods tumbled 26%.
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