China 'underestimated' Trump, a key adviser says

Trump escalates China trade war with extra tariffs

"Higher prices for everyday essentials and lost jobs threaten to sap the energy out of the strong USA economy, just as most Americans are starting to enjoy the benefits of historic tax reform".

U.S. companies including Apple, GM and Boeing generate large amounts of sales in China.

Trump is pressing Beijing to scrap or roll back technology development strategies its trading partners say include stealing or pressuring companies to give up know-how in violation of its market-opening commitments.

World financial markets buckled after President Donald Trump ratcheted up the tensions by proposing a fresh batch of tariffs on Chinese products.

China's list of tariffs released Friday primarily covered agricultural products and automobiles.

The Japanese yen climbed 0.8 percent against the dollar to 109.64 yen, its highest level in a week, after Trump threatened to impose a 10 percent tariff on $200 billion of Chinese goods, ratcheting up a trade dispute with Beijing.

"China apparently has no intention of changing its unfair practices related to the acquisition of American intellectual property and technology".

Late on Monday, Trump added that new tariffs would "go into effect if China refuses to change its practices, and also if it insists on going forward with the new tariffs that it has recently announced".

Secretary of State Mike Pompeo made the remarks at the Detroit Economic Club as global markets reacted to trade tensions between the U.S. and China. That means things like tourism and education, industries from which the United States benefits a lot more than China does.

"As China hawks, like (Robert) Lighthizer and (Peter) Navarro, appear to have gained power within the Trump administration lately, an all-out trade war now seems more inevitable", said Yasunari Ueno, chief market analyst at Mizuho Securities. "Rather than altering those practices, it is now threatening United States companies, workers, and farmers who have done nothing wrong", he said. He added that China is a "predatory economic government" that is "long overdue in being tackled", matters that include IP theft and Chinese steel and aluminum flooding the USA market.

The Dow Jones Industrial Average .DJI fell 287.12 points, or 1.15 percent, to 24,700.35, the S&P 500 .SPX lost 11.18 points, or 0.40 percent, to 2,762.57 and the Nasdaq Composite .IXIC dropped 21.44 points, or 0.28 percent, to 7,725.59. Boeing's stock shed 4.3 percent, Caterpillar 4 percent and GE 2.2 percent.

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The Chinese Commerce Ministry reacted quickly to Trump's announcement, accusing the United States of "extreme pressure and extortionist behavior" and warning it would "strike back hard".

China has, for example, yet to approve USA chipmaker Qualcomm Inc's proposed US$44 billion acquisition of NXP Semiconductors, a deal that has already got a nod from eight of the nine required global regulators. They noted that the value of the goods involved in additional tariffs exceeds by $70bn the total value of USA imports to China past year.

"If the USA loses its senses and publishes a new list, China will be forced to take comprehensive measures that are both strong in quantity and gravity and will fight back", it read.

For some companies, the exposure to China is far higher: US tech giant Qualcomm generates 63 percent of its revenue in China and needs Chinese authorities to approve its takeover of semiconductor maker NXP.

The National Retail Federation asked Congress to intervene for USA business on the tariffs issue. Oxford Economics estimates that if Trump imposed the $200 billion in duties and China responded in kind, US growth could slow by 0.3 percentage point next year.

The initial list of 1,102 Chinese products facing tariffs, covering 28 closely printed pages, was issued June 15.

The next step will be for the Office of the U.S. Trade Representative to identify the Chinese goods to be penalized and to conduct a legal review.

China, of course, imports nowhere near $250 billion, let alone $450 billion in goods from the USA each year that it could tax in retaliation. The affected 818 Chinese imports was worth about $34 billion-a measure that would take place on July 6. Around 3 million Chinese visit the United States annually spending tens of billions of dollars.

Mr Trump also has slapped tariffs on steel and aluminium imports from Canada, Mexico and European allies.

But Wall Street has viewed the escalating trade tensions with wariness, fearful they could strangle the economic growth achieved during Trump's watch.

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