White House economic adviser Larry Kudlow told a Fox News program that China needs to agree to "very strong" enforcement provisions for an eventual deal and said the sticking point was Beijing's reluctance to put into law changes that had been agreed upon.
"The longer we're involved in a tariff battle or a trade war, the better chance there is that we could actually enter into a recession", Republican Senator Rand Paul said on ABC's "This Week" on Sunday. "Losing a valuable market, losing stable pricing, losing an opportunity to support our families and our communities".
Last July, Trump began gradually slapping tariffs on Chinese imports.
Imposing those tariffs would affect a wide range of consumer goods - clothes, shoes, toys and electronics - that have been mostly exempted so far and could prompt steep cost increases that many U.S. citizens would likely notice.
About an hour into the trading session, the Dow Jones Industrial Average was down almost 530 points, or 2.0pc, at 25,412.74.
The Shanghai Composite index fell 1% to 2,910.04.
Spot gold added 1.1% to $1,299.97 an ounce.
Global markets remain on red alert over a trade war between the two superpowers that most observers warn could shatter global economic growth, and hurt demand for commodities like oil.
China will elevate tariffs on US$60-billion in goods imported from the USA, the country's finance ministry said Monday night.
Xi is resisting giving in on a list of trade compromises, even in the face of tariffs that threaten to add 25 per cent to the cost of goods shipped from China to the U.S.
US President Donald Trump last week increased tariffs on $200 billion worth of Chinese goods to 25% and ordered US trade officials to start looking into imposing tariffs on another $300 billion worth of Chinese goods.
Some people just don't get it!" the U.S. president wrote, after tweeting that the tariffs can be "completely avoided if you by from a non-Tariffed Country, or you buy the product inside the United States of America (the best idea). The tech heavy Nasdaq is down 2.5%. It said the tariffs will take effect on June 1.
The response was announced after Trump on Monday warned Beijing not to retaliate.
Chinese officials gave no indication Monday what steps they might take after threatening "necessary countermeasures" for Trump's penalties on $200 billion of Chinese goods, imposed Friday.
People close to the talks said finding an agreement is likely to prove increasingly hard with hardliners on both sides seeing the latest breakdown as evidence the other side can not be trusted.
The president's statements about U.S.
As for future negotiations, while there are "no concrete, definite plans yet", Kudlow said China had invited Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer to Beijing - and higher-level discussions could be on the cards. Ironically, such efforts could reduce the possibility of a deal and prolong the tariffs, one person close to the talks said.
"The market thought it was positioning and at the end of the day there would be a deal and that over the weekend they would work things out and that is clearly not the way this thing is going", said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.
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