Gold Prices Fall As US-China Trade Spat Intensifies

Marco Green
September 25, 2018

The State Council accused the Trump Administration of "abandoning the fundamental norms of mutual respect and equal consultation that guide global relations" since coming to office in 2017 as it pursued an America First trade policy.

On Monday, US imposed a 10 percent tax on 6,000 Chinese goods, ranging from rice and textiles to clothes and manufacturing goods.

But he said that Trump's lack of a clear goal for the trade war - outside of vague assertions about the trade deficit - raises the likelihood that the negotiations could be fruitless.

Fitch Ratings has cut its growth estimates for China and the world for 2019.

The latest round of United States duties took effect just after midnight Washington time on Monday (midday in Beijing) on a list of products ranging from frozen meat to television components.

Beijing's retaliatory tariffs on $60 billion in American goods were set to go into effect soon after, the finance ministry announced last week. The country could opt to prop up domestic companies hit by the tariffs, organize consumer boycotts, or even block exports of rare earths and other valuable goods to the U.S. That has long-term consequences for China, too, as it will encourage a rapid military build-up by the USA and maybe Japan in the region, but it's not a bad short-term lever on Trump as long as it doesn't go too far.

Efforts at diplomacy have failed, with no breakthroughs since high-level talks began in May.

The latest batch of Chinese imports to be hit will face 10 percent tariffs through the end of the year, and then the rate will jump to 25 percent.

Still, the United States remains open to talks, Lindsay Walters, deputy White House press secretary, said.

While Trump and Chinese President Xi Jinping are not expected to speak at this week's meeting of the UN General Assembly, there is a chance talks could resume in the coming months during the Asia-Pacific Economic Cooperation and G20 summits. Stock markets in China and Japan are closed for a local holiday on Monday but Hong Kong's Hang Seng index remains open and was down by 1.66% at 8.30 a.m. BST (3.30 a.m. ET).

Neither side has backed down since the tit-for-tat tariff war began in July when the United States imposed duties on US$34 billion of Chinese goods.

This may be especially true with China, long a bête noire among populists in regard to trade.

"Retailers are already facing a tidal wave of tariffs". That comes just weeks after tech giant Apple unveiled its new product line, which includes an updated smartwatch that has drummed up consumer interest.

But officials say Beijing will soon run out of USA goods to impose tariffs on.

President Donald Trump's tariffs on another $200 billion of Chinese imports took effect on Monday, with Beijing accusing Washington of "economic intimidation" as the standoff between the world's top two economies clouds the global outlook.

"The Trump administration must get its position straight though - what does it want from China, and who is empowered as a negotiator by President Trump to bring the deal home? Unless that happens, serious negotiations will be impossible and the likelihood of continued escalation increases", Mr Alden said.

Other reports by Click Lancashire

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