Stocks extend slide, yen up as Sino-US trade dispute escalates

Tim Cook meets with Apple Store employees in China

To respond to Trump's threat to impose tariffs on as much as $250 billion worth of Chinese goods, Beijing would have to find other ways to respond.

Trump is betting that the prospect of huge and widespread tariffs will force Beijing to agree to act to reduce its trade surplus with America ($336 billion in goods and services last year) and stop its forced technology transfers, cyber-theft and other aggressive policies.

"It looks like the probability of a full-blown trade war between the world's two largest economies is rising", said Louis Kuijs, an economist at Oxford Economics.

China is matching the tariffs with its own duties on an equal value of USA goods.

With the trade feud escalating and no further talks scheduled between the two governments, stocks dropped sharply Tuesday.

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.

"These actions cause the USA to lose credibility in the world's eyes, and harm the interests of U.S. and Chinese people and companies". The Japanese Nikkei 225 lost 1.77 percent.

The Commerce Ministry criticized Trump's order for new tariffs on $200 billion of Chinese goods as blackmail.

He condemned China's "unfair practices related to the acquisition of American intellectual property and technology" and added: "Rather than altering those practices, it is now threatening United States companies, workers, and farmers who have done nothing wrong".

Neither side has yet imposed tariffs on the other in their growing dispute over technology and the USA trade gap. It has yet to say when that might take effect.

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President Donald Trump has announced a 25 percent tariff on up to $50 billion of Chinese products. The two nations are edging toward a trade fight that analysts say would undermine both their economies and likely slow global growth.

Analysts in Washington warned that China could also raise tariffs on U.S. good, as it did on Friday, by announcing additional tariffs of 25pc on $50bn worth of American products.

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. That would leave less than $100 billion in US goods to subject to a tariff hike, far short of the $200 billion Trump is threatening. Total imports of American goods into China were worth less than $170 billion in 2016, according to the USTR.

The U.S. imports approximately $505 billion a year in goods from China.

China is retaliating by raising import duties on 34 billion dollars (£25 billion) worth of American goods, including soybeans, electric cars and whiskey.

"Manufacturers certainly have concerns that tariffs will cause more problems than they solve, but we also recognize that that the administration may intend to use them as a negotiating tactic to bring China to the table and achieve larger goals", Jay Timmons, NAM president and CEO, in a statement.

China's yuan fell to a more than 5-month low to the dollar, despite a firmer official yuan midpoint, as market sentiment soured.

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

Trump's trade adviser, Peter Navarro, told reporters that China may have "underestimated" the President's resolve in earlier negotiations.

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