Donald Trump said the US would place a 10 per cent tariff on $300 billion (€270 billion) of additional Chinese goods, in a new escalation of the trade war between the world's two largest economies.
In a series of Twitter posts, Mr Trump lamented the outcome of a round of negotiations between top US and Chinese officials this week in Shanghai, saying China was not following through on its pledges to buy more American farm products and restrict the flow of the opioid fentanyl to the US.
“The US will start, on September 1st, putting a small additional Tariff of 10% on the remaining 300 Billion Dollars of goods and products coming from China into our Country. This does not include the 250 Billion Dollars already Tariffed at 25%,” Mr Trump wrote.
“We look forward to continuing our positive dialogue with China on a comprehensive Trade Deal, and feel that the future between our two countries will be a very bright one!” he added.
China retaliated over the last round of US tariffs by imposing their own tariffs on $110 billion in American goods, including agricultural products, in a direct shot at supporters of Mr Trump in the US farm belt.
‘Constructive’ talks
Mr Trump's threats come after a US delegation returned to Washington from what the White House described as "constructive" trade talks. The negotiations were expected to resume in Washington in September, though exact dates were not announced.
The announcement of fresh tariffs pushed the yield on the benchmark 10-year treasury note to 1.89 per cent, its lowest level since 2016. Shorter-dated treasury bills spiked, with the yield plummeting to 1.75 per cent. Bond yields move inversely to price. The dollar lifted from its lows for the day, rising 0.03 per cent against its peers.
The S&P 500 sank as much as 1.1 per cent on the announcement, before paring back some of its losses.
The tariff developments took on added meaning, coming the day after Fed chairman Jerome Powell cited trade tensions, weakening global growth and too-low inflation and as justification for Wednesday’s decision.
Helping fuel the bond rally, a report showing US manufacturing activity deteriorating also dimmed the growth picture. "It means the first of Powell's three items just went from simmer to boil," said John Briggs, head of strategy for the Americas at NatWest. "He probably regrets not leaving the door more open to future cuts 'if necessary.' " – Financial Times/Reuters
