Trade war: Trump accuses Beijing of election meddling amid flurry of tariffs - business live
China has announced a levy on $60bn of US goods, hours after Donald Trump imposed new tariffs on $200bn of Chinese products
- Latest: Beijing announces tariffs on $60bn US goods
- Trump: China is interfering in our elections
- Markets shrug trade war off...but are they complacent?
Earlier:
4.44pm BST
If you're just tuning in, here's my colleague Richard Partington on today's trade war action:
China is to slap tariffs on an additional $60bn (56bn) of imports from the US in retaliation against $200bn of new US import tariffs announced by Donald Trump.
The latest moves represent a new step towards a full-scale trade war between the world's two biggest economies. Further escalation is deemed likely because Trump is facing low approval ratings ahead of the US midterm elections while China will not want to be seen to back down.
Related: China hits back at US with $60bn of new tariffs
4.36pm BST
The trade war was already unpopular with some US citizens, even before today's escalation.
CNBC explains:
A quarter of registered voters nationally think raising tariffs will do more to protect American jobs and help the U.S. economy, according to an NBC News/Wall Street Journal poll in July.
Meanwhile, about half of registered voters said duties will do more to raise the costs of goods or hurt the economy. Sixteen percent responded that levies will not have much of an effect.
3.37pm BST
My colleague Simon Tisdall fears that the trade war could spark a deeper dispute between the US and China.
Stepped-up efforts by Chinese air and naval forces to intercept or prevent "freedom of navigation" patrols by American (and British) warships in the South China Sea could be another unintended consequence of Trump's trade war. Until now, the two issues have been kept separate. But what if a frustrated Xi, who has been attacked at home for being both too hardline and too soft over tariffs, decided to conflate them?
Likewise, the Trump administration last week criticised China's repression of the Muslim Uighur minority in Xinjiang. That unexpected intervention, though backed by the UN and human rights organisations, was seen in Beijing as another gratuitously provocative (and ill-timed) assault on its sovereignty and national interests.
Related: Donald Trump's reliance on Chinese restraint is risky
3.30pm BST
Reuters has analysed China's new tariffs on US goods, and found that they are less severe than Beijing proposed last month.
Here's the details:
China will levy tariffs on a total of 5,207 U.S. products, at 5% and 10%, instead of the previously proposed rates of 5%, 10%, 20% and 25%, even as the products remain unchanged from the previous plan, the finance ministry said.
China will impose a 10% tariff on U.S. products it previously designated for a rate of 20% and 25%, and 5% tariffs on goods previously under the 5% and 10% rates.
3.16pm BST
The boss of Apple, Tim Cook, says he's optimistic that the US and China will reach a ceasefire in the trade war.
Apple Inc chief executive Tim Cook, whose products have been spared from new U.S. tariffs imposed on Chinese goods, said on Tuesday he was optimistic that the United States and China will eventually work through their trade differences.
"I'm optimistic because trade is one of those things where it's not a zero-sum game," Cook told ABC News' "Good Morning America" program on Tuesday.
2.54pm BST
Fawad Razaqzada of Forex.com says global investors are relieved that China hasn't unleashed a more severe reaction against Donald Trump today.
China's latest move is measured and not over-aggressive as it now plans to impose 10% tariffs on US goods that it had previously listed for a 20-25% tariff rate. Likewise, the items that were listed for 10% will now only face a 5% tariff.
So it looks like China has blinked first, and this puts the US government in a great position to agree on a new trade deal.
2.51pm BST
Over in New York, investors are shrugging off these latest blows in the trade war.
Wall Street has opened higher, sending the Dow Jones industrial average up 85 points or 0.33%.
2.21pm BST
#China slaps back at @realDonaldTrump with tariffs on $60bln. pic.twitter.com/qgzrtcE4av
2.18pm BST
China adds that it will "respond accordingly" in future, if the US insists in raising tariff rates.
So it doesn't agree that it is out of bullets, as commerce secretary Wilbur Ross claims.
2.16pm BST
The Chinese government says it hopes America stops creating "trade frictions", and instead maintains a "mutually beneficial trade relationship".
2.11pm BST
Boom! China has announced retaliatory action against America, as the trade war intensifies further.
Beijing says it will impose tariffs of up to 10% on $60bn of US imports, starting on 24 September.
2.04pm BST
Boom: Donald Trump has promised to impose further economic retaliations against China, if it tries to hurt his patriotic supporters.
The US president has tweeted that China is trying to interfere in US elections (it makes a change from Russia....), and pledged to retaliate:
China has openly stated that they are actively trying to impact and change our election by attacking our farmers, ranchers and industrial workers because of their loyalty to me. What China does not understand is that these people are great patriots and fully understand that.....
.....China has been taking advantage of the United States on Trade for many years. They also know that I am the one that knows how to stop it. There will be great and fast economic retaliation against China if our farmers, ranchers and/or industrial workers are targeted!
1.54pm BST
Here's a clip from Wilber Ross's interview, arguing that American families won't really notice the impact of 10% tariffs on $200bn of good from China.
Commerce Secretary Wilbur Ross leaves CNBC hosts dumbfounded after he tells them that American families won't be bothered by tariffs on $200b of Chinese goods because "it's spread over thousands and thousands of products" so "nobody will actually notice" that prices went up. pic.twitter.com/VXgCZ9EQFr
1.50pm BST
Wilbur Ross also claims that the trade war has strengthened the bonds between the US, the European Union and Japan:
Wilbur Ross on CNBC says EU and Japan helping push China toward a level playing field on trade.
"It may seem strange, but the imposition of these various tariffs has actually brought us closer together to those two major allies." pic.twitter.com/9q4Wr8UHdL
1.09pm BST
Is Wilbur Ross correct to claim that China is "out of bullets" to fight a trade war?
By one measure, yes. The US only exported $130bn to China last year. Beijing already imposes tariffs on $50bn worth, so it can't match America's $200bn move.
So Wilbur Ross saying China out of bullets - simply not true.
China can play long game
Xi Jinping will be around long after Trump is gone.
12.46pm BST
US Commerce Secretary Wilbur Ross is up early, appearing on CNBC to discuss the new tariffs on $200bn of Chinese imports announced by Donald Trump last night.
Ross declared it is up to Beijing to decide whether to address America's concerns over free trade and intellectual property rights.
"Our purpose is to have constructive negotiations with the Chinese to resolve the fundamental issues. So the question about whether or when to have a discussion is very importantly in their ballpark."
Commerce Secretary Wilbur Ross: China is 'out of bullets' to retaliate against Trump's new trade tariffs https://t.co/Z7gR2UUF5J pic.twitter.com/EFJkXoTgSj
.@SecretaryRoss on tariffs: "This isn't shot from the hip."
12.17pm BST
Larry Hatheway, chief economist at asset manager GAM, believes investors aren't taking the trade war seriously enough.
Having seen markets rise in Asia and Europe today, Hatheway warns that the situation could deteriorate sharply, hurting the global economy.
"Without question, tariffs are economically counterproductive and create inefficiencies in supply chains, location of production and add costs to firms and consumers. Criticism of the new tariffs from key US business and consumer groups was immediate. Investors may also be hoping that the US mid-term election outcome might temper the Trump Administration's willingness to escalate trade tensions.
"But risks remain. One is the unclear rhetoric from the US Trump Administration, which has put forward a variety of explanations for tariffs (elimination of bilateral trade deficits, measures to counter intellectual property right infringement, objections to China's investment in new technologies, etc). That makes it difficult to know what the basis for an agreement to diffuse the situation might look like.
11.58am BST
Europe's trade commissioner, Cecilia Malmstrim, has criticised Donald Trump's new tariffs, telling reporters (in Brussels, I think) that they are "very unfortunate".
She also disputed Trump's claim earlier this year that trade wars are 'good and easy to win' (if you're running a big trade deficit)
This escalation is very unfortunate", Cecilia Malmstrom, the EU's trade commissioner, told reporters.
"Trade wars are not good and they are not easy to win"....
EU trade chief Malmstrom criticises US tariffs on China https://t.co/7shSCYVWlR
11.52am BST
Companies are starting to scramble to protect themselves from trade war damage, says Chris Towner, director at JCRA, a financial risk management consultancy.
He reports:
We are certainly seeing an increase in firms looking to review their foreign exchange exposures and put together hedging strategies to help them cope with the volatility.
In reaction to the trade disputes and follow-up actions, we have seen the Chinese yuan weaken by almost 10% against the US dollar, since the outset of this year. This will act as a buffer for Chinese exporters dealing in the international markets.
11.23am BST
Asian stock markets ended the day on a strong note, despite the latest trade war escalation.
The renewed appetite for risky assets suggests that investors are getting tired of this situation and are paying less and less attention to Donald Trump's tweets and public comments.
ABN Amro on US-China tariffs:
- 10% import tariff is not really prohibitive
- Given regular FX fluctuations, input prices and flexibility for both importers and exporters to adjust margins somewhat, a 10% import tariff might not have a strong impact on bilateral trade flows
10.40am BST
Donald Trump's trade war has already impacted on 2.5% of world trade, says Timme Spakman, economist at Dutch bank ING.
And it could get worse, if the White House follows through on its threats to impose even more tariffs on China.
As President Trump pulled the trigger on 10% additional tariffs on imports from China last night, the percentage of world trade affected by it all just went up to 2.5%. If the US acts on further tariff threats, this could go up to 4%
The new measures will cover USD 200bn worth of US imports from China, including jet engines, electronics, and fish.
10.20am BST
Newsflash: Jack Ma, the founder of Chinese e-commerce giant Alibaba, has warned that the US-China trade war could rumble on for decades.
Jack Ma on the China US trade war:" it will last for a long while. It may last 20 years. Even when Donald Trump retires, the new president will continue. This is about big power rivalry. One thing for sure is the world needs a new set of trade rules and orders." pic.twitter.com/OQ2YER2w3C
Alibaba's Jack Ma warns that the U.S.-China trade war could last 20 years
9.44am BST
The full list of Chinese products that will hit with an extra 10% tariff next week (rising to 25% eventually) is online here.
Apple's smart watch, wireless headphones, and smart speaker will not be affected by the Trump administration's latest tariffs on Chinese imports, according to a list of affected products listed on Monday.
Some Apple products, including its MacMini, will still be affected.
9.11am BST
Bloomberg has estimated that the trade war will knock around half a percentage point off China's growth rate this year.
The impact could rise to almost one percentage point, though, once these latest tariffs rise from 10% to 25% in 2019.
#DailyDataPoint: Bloomberg Economics' initial estimate is that tariffs will take 0.5 percentage point off China's GDP growth, and the cost will be around 0.9 percentage point a year when the 25% tariff on the latest round of goods takes effect https://t.co/lP6VlfibYb pic.twitter.com/ExseO6VBHx
8.51am BST
Paul Donovan of UBS Wealth Management has a good take on the US tariffs:
8.51am BST
Reminder: China can't simply retaliate by slapping a 10% tariff on $200bn of US goods, because it only buys around $130bn of stuff from America each year.
And it already has new tariffs on 50bn-worth of those imports, meaning Beijing only has $80bn of firepower left.
8.35am BST
There's a flurry of activity in Beijing right now.
The foreign ministry is giving a briefing on trade, and accusing the US of not being sincere.
8.26am BST
Newsflash: China has announced it will retaliate against America's new tariffs....without saying how.
The Chinese commerce ministry says it has no choice but to respond to the new 10% tariff on thousands of goods entering the US.
BREAKING:
- China to levy retaliatory tariffs simultaneously with the US
- China says it is "forced to retaliate", new US tariffs bring uncertainty to trade talks
While the UK continues to scratch its head over its relationship with Europe, there is a full scale trade war underway between the world's two biggest economies https://t.co/B4y9hExwNW
8.14am BST
America's Information Technology Industry Council (ITI), which represents major tech firms, was quick to criticise these new tariffs.
China must change, but this is not the way to achieve the needed market access in China. More tariffs not only punish American consumers, manufacturers, and businesses of all sizes, they will also diminish the opportunity to negotiate with the Chinese and address longstanding trade issues.
If implemented, these tariffs will have both short- and long-term effects on the United States - from increased prices at the checkout counter to decreased leadership on the emerging technologies that will shape our future."
7.59am BST
Elsa Lignos of RBC Capital Markets believes Americans will soon feel the impact of Trump's tariffs in the shops:
Market reaction was muted as the tariffs had been widely telegraphed (and some cling to hope that the delay of 25% tariffs until January will mean more time for negotiation and reconciliation post midterms - an idea we think is unlikely).
We have now reached a level of affected imports where it will necessarily start to impact consumer prices.
7.56am BST
The oil price, which is often a good barometer for growth prospects, has dipped since the US tariffs were announced.
The growing trade dispute has hurt trading sentiment. The impact on economic growth is slowly dripping in, which again hurts oil prices,"
7.49am BST
Somewhat surprisingly, China's stock market has actually risen since Donald Trump escalated the trade war.
The benchmark Shanghai composite index has jumped by 1.7% today, having slumped to a four-year low on Monday.
Shanghai Composite +1.6% the day after new tariffs announced, because why not eh pic.twitter.com/ScDmfoXKEY
7.37am BST
A senior Chinese regulator has accused Donald Trump of creating a toxic atmosphere that could undermine efforts to reach a trade pact.
Fang Xinghai, vice chairman of China's securities regulator, also claimed that China wouldn't cave in to these latest tariffs.
"President Trump is a hard-hitting businessman, and he tries to put pressure on China so he can get concessions from our negotiations. I think that kind of tactic is not going to work with China."
7.23am BST
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
"For months, we have urged China to change these unfair practices, and give fair and reciprocal treatment to American companies. We have been very clear about the type of changes that need to be made, and we have given China every opportunity to treat us more fairly.
But, so far, China has been unwilling to change its practices."
"I urge China's leaders to take swift action to end their country's unfair trade practices. Hopefully, this trade situation will be resolved, in the end, by myself and President Xi of China, for whom I have great respect and affection."
Related: Trump imposes $200bn of new import tariffs on China as trade war escalates
#FTSE100 Index called to open -35pts at 7265 after Trump imposes tariffs an another $200bn of China imports, weakening USD but keeping GBP strong; dual-listed
Miners mixed downunder o'night pic.twitter.com/1FLkbslirS