Trump 'happy' to keep tariffs on Chinese goods; Beijing threatens retaliation

Wall Street initially tumbled following US President Donald Trump's shock tariff threat against China

The Trump administration has threatened to raise tariffs on $200 billion in imports from China to 25% from 10%, starting on Friday.

Stocks sank sharply Tuesday as investors fretted that delicate trade talks between the USA and China could collapse.

Trump has approved 25% percent tariffs on $50 billion of Chinese goods and 10% on $200 billion.

"Weak growth in Chinese exports to the U.S. will also be concerning to Chinese officials, particularly amid a potential escalation in the trade war", said Nick Marro, an analyst at The Economist Intelligence Unit. However, he will only attend the negotiations on Thursday and Friday.

Global equities tumbled toward five-week lows as the escalating trade fight fed worries about the world economy and investors sought the safety of bonds and the Japanese yen, which hit a six-week high against the USA dollar.

"The base case still remains we see a framework agreement reached, but the market is still repricing in the risk", Edward Moya of Oanda said in a report.

Wall Street's major indexes reversed course from their early decline after White House spokeswoman Sarah Sanders said that the United States had received an indication from Beijing that China wants to make a trade deal. "If there is no deal that will be interpreted quite negatively by markets", said Matt Forester, chief investment officer of BNY Mellon's Lockwood Advisors in King of Prussia, Pennsylvania. But while American exporters have been hit hardest, Chinese industries including electronics that Beijing sees its economic future also have suffered double-digit declines in US sales.

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China is Alabama's second largest trade partner. "We'll see, but I am very happy with over $100 billion a year in tariffs filling United States coffers... great for U.S., not good for China!"

The export figure was a striking decline from March's 14.2% growth and reflected weakening global demand as well as USA tariff hikes on Chinese goods.

Beijing is calling for an immediate end to American retaliatory measures on trade - which have dented China's economic growth - and it believes it has already made enough concessions to the US.

Whether China's delegation intends to cut a deal while in the USA remains to be seen, as Trump says. He was originally scheduled to attend negotiations Wednesday through Saturday.

Villere sees the higher volatility as a buying opportunity, "but we've got to get through this trade war".

But recently it has enacted new laws and amended others, moves some see as efforts to address concerns shared by the US and other foreign investors - including those from China's largest trading partner, the European Union.

US Treasury Secretary Steve Mnuchin said the US negotiating team unanimously recommended the tariff hike after it got "new information" over the weekend. So far, McEwan added, tariffs had knocked 0.4 points off China's growth and 0.2% off USA growth. And while some market analysts still expect the countries to clinch a deal, others think Mr. Trump's aggressive rhetoric is unlikely to sway the Chinese. "The talks were so bad that the real surprise is that it took Trump until Sunday to blow up", the source said.

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