Trump says China agreement 'possible this week' - as it happened
US is poised to hike tariffs on Chinese goods, as vice-premier Liu He travels to Washington for crunch talks. This live blog has closed. Follow the link below for the latest updates.
- Liu He is meeting US officials now
- Tariffs to rise to 25% at midnight, East coast time
- Summary: Markets brace for crunch trade talks
- Trump discusses China trade talks
- European markets hit six-week lows
11.07pm BST
We're not expecting any developments from the US-China trade talks for some time.
Liu He, Steven Mnuchin and Robert Lighthizer and colleagues are locked in talks trying to hammer out a deal. Negotiations are expected to run into dinner tonight, so it could be a late one.
10.43pm BST
China has vowed to retaliate against the US if tariffs are raised.... but Brian Wesbury of First Trust Portfolios suggests a currency war (one option) would be counter-productive.
If China devalues the yuan in response to trade skirmish, Chinese citizens will have reduced purchasing power. If it sells US treasuries from reserves, it will need to replace them with less safe and stable assets. Neither are good options for retaliation.
It's time China shifted to domestic led growth. They want to do it on their own timetable, but keeping tariffs high in order to retain trade surplus has now run its course. China needs to trust in markets more and stop the central planning.
10.14pm BST
Here's a video clip of the Chinese delegation arriving for today's talks:
Vice Premier Liu He arriving for the 11th round of face to face talks. At this point there seven hours before $200B of Chinese imports get tariffs raised from 10% to 25%. Reading body language there were smiles with Lighthizer & Mnuchin our to greet him. #China #Trade pic.twitter.com/99p5gpsF1x
10.14pm BST
At long last, the much-awaited trade negotiations between the US and China are getting underway in Washington.
Vice-premier Liu He has been spotted arriving at the office of US Trade Representative Robert Lighthizer a few minutes ago.
NEW: Mnuchin, Lighthizer on standby at USTR to receive Chinese delegation led by vice premier Liu He pic.twitter.com/qPnaXOg1yS
US top trade rep Bob Lighthizer and US Treasury Secretary Steve Mnuchin waiting for Chinese delegation to arrive for talks to resume moments ago. Liu He, China's trade rep, entered the building at 5 o'clock sharp. Impressive with DC traffic well underway. pic.twitter.com/IYcQEPfiDi
10.05pm BST
Interesting.... The Customs Office has revealed that goods which set off from China to the US before tomorrow will still be taxed at 10%, not the new 25% rate.
That means Chinese firms are effectively getting a grace period -- anything already en route by boat or air will still get the lower tariff.
US Customs And Border Protection: Affected US-Bound Cargoes Leaving China Before 1201 ET On Friday Will Pay 10% Tariff Rate, Not Higher 25% Rate - RTRS
9.54pm BST
It's official! US Customs officials are ready to start collecting a new 25% tariff rate on thousands of products from China, in just seven hours time.
A notice on the U.S. Customs and Border Protection web site says the new higher 25% tariff on $200bn worth Chinese imports will kick in at 12:01 a.m. (05:01am UK time on Friday).
9.35pm BST
John Stoltzfus, chief investment strategist at Oppenheimer Asset Management, reckons many investors expect a trade deal, eventually. Just not today.
Stoltzfus predicts that both sides will take a pragmatic approach sooner or later, saying (again via Reuters):
"We may very well see tariffs put in place tomorrow, but it's going to get resolved.
It's too impractical for either side to extend this into a protracted trade war."
9.20pm BST
After another testing day, the New York stock market has closed lower tonight - but it's not a rout.
The S&P 500 fell 0.3% to close at 2,871, it's fourth fall in as many days, to a one-month low. The Nasdaq lost 0.4%.
8.29pm BST
China isn't remotely confident of getting a trade deal this week, reports Hu Xijin of the Global Times.
Today, I asked one from Chinese side who knows the trade talks well, how many possibilities there still are to reach a deal before Friday. His answer is: 0. If it is that bad, the real suspense is whether the two sides will continue negotiations after Friday.
More and more Chinese now tend to believe the current US government is obsessed with comprehensively containing China. A trade deal, even if reached, will be limited in actual meaning and could be broken constantly. So they support being tough on the US, giving up any illusion.
7.54pm BST
Wall Street continues to inch its way back from its earlier lows.
The Dow is now only 0.5% down on the day, a loss of 123 points to 25,844.
6.54pm BST
Stephen Massocca, managing director at Wedbush Securities in San Francisco, sums up the dilemma facing investors (via Reuters):
"The trade tensions are taking down markets with a broad brush. In all likelihood there is going to be a resolution sometime or it could lead to a showdown."
6.39pm BST
Time for a recap:
"He just wrote me a beautiful letter. I've just received it and I'll probably speak to him by phone.
I asked Trump if he's going to talk to Xi by phone.
"He just wrote me a beautiful letter. Just received it. And I'll probably speak to him by phone," Trump told us.
(No call is scheduled for today, as of now, I'm told.) pic.twitter.com/7NOxJnzUFM
6.17pm BST
CNBC has learned that Liu He's status has been downgraded, suggesting he may have a smaller role in the trade talks.
China's top trade negotiator Liu He will meet with President Donald Trump's trade team on Thursday without the title "special envoy" for President Xi Jinping, a role he has held in previous talks, suggesting the vice premier may have diminished authority to make concessions that could be key to striking a deal.
A source on the Chinese side told CNBC's Eunice Yoon that Liu's demotion suggests that he may not have much leeway to make compromises on his own.
China's top trade negotiator Liu He will meet with President Trump's trade team on Thursday without the title "special envoy" for President Xi Jinping, a role he has held in previous talks. https://t.co/U7MQzE2bKx
6.06pm BST
Wall Street is recovering some of its losses, as traders digest Donald Trump's suggestion that a trade deal with China is still possible.
The Dow is now down 199 points, or 0.75% - only half as bad as earlier. The S&P 500 is down 0.5%.
5.51pm BST
Here's a video clip of President Trump discussing the trade dispute with China, and the 'beautiful letter' sent by president Xi.
Q: "Do you have plans to talk to President Xi?"
President Trump: "Well, he just wrote me a beautiful letter. I just received it. And I'll probably speak to him by phone." pic.twitter.com/zAzKNmm0pn
5.50pm BST
Donald Trump also defended the tariffs imposed on Chinese imports into America.
He says they have raised $120bn, which is "ultimately, mostly" paid by China (this is a contentious claim, as US companies pick up the bill).
5.46pm BST
Donald Trump then reveals that president Xi wrote that China and the US should work together to see if they could get something done.
Some shiny new headlines rolling out now about the U.S.-#China trade talks. Trump said that the letter he received from Xi is 'beautiful'. pic.twitter.com/cgxLfAcy25
5.40pm BST
Newsflash: Donald Trump is discussing the trade war at the White House right now.
President Trump received a "beautiful letter" from Xi Jinping, he says just now. He will probably speak to him by phone, and meetings with Chinese begin at 5. It's a tense moment, with the largest tariff tranche the president has done to date set to go into effect at midnight
TRUMP SAYS IT IS POSSIBLE TO GET A TRADE DEAL WITH CHINA THIS WEEK
5.14pm BST
The long-awaited talks between China's vice-premier Liu He and top US officials don't appear to have started yet.
Alan Rappeport, economic policy reporter at The New York Times, reports that talks should resume at 5pm EDT (or 10pm UK time)
Chinese officials are due at USTR around 5pm to restart trade talks. Mnuchin and Lighthizer will have dinner with Liu He this evening. Barring a breakthrough, more tariffs come at midnight. https://t.co/mKytHmsAYv
5.01pm BST
European traders are catching their breath after another day of deep losses, triggered by trade war fears.
Equities have fallen sharply in Paris, Frankfurt, Milan, Madrid and London, as investors ditched risky assets.
The rally in safe havens and continued sell-off in global equities today suggest that investors remain concerned about a renewed escalation of trade tensions between the US and China.
Irrespective of how trade negotiations eventually play out, we think that the Japanese yen and gold will make further ground in the rest of 2019, as the US economy slows sharply and the rest of the world remains weak.
4.51pm BST
Steen Jakobsen, chief economist at Saxo Bank, has warned clients to expect major market volatility over the next couple of days.
He think's there's a 75% chance that the US and China reach some sort of diplomatic agreement -- but if that doesn't happen, shares could tumble badly.
4.19pm BST
It's official! The FCC has voted 5-0 to reject China Mobile's application to operate in the US, due to espionage concerns.
4.14pm BST
Newsflash: America's communications regulators is taking aim at China's telecoms providers.
The Federal Communications Commission is set to vote to deny an application from China Mobile to enter the US market, according to a newsflash on my Reuters terminal.
NEWS: @BrendanCarrFCC calls for investigation into China Telecom and China Unicom's 214 interconnection authorizations.
Security threats have evolved since those companies were granted interconnection rights to U.S. networks in the early 2000s.#FCCLive
RTRS: FCC COMMISSIONER SAYS U.S. GOVT SHOULD INVESTIGATE WHETHER TO REVOKE PRIOR APPROVAL FOR CHINA UNICOM AND CHINA TELECOM TO OPERATE IN U.S. -- STATEMENT https://t.co/p2wE1UmJ0e
4.00pm BST
Investors are running for cover, in case the trade war between the US and China blows up, says David Madden, analyst at CMC Market.
European equity markets are in turmoil as traders are running scared about the prospect of an escalation in the US-China trade dispute.
The US is set to up the ante, by raising levies and introducing more tariffs on Chinese imports tomorrow, and that has prompted dealers to cut and run. Europe is getting hit in the cross-fire because when the two largest economies in the world engage in a trade war, it bodes badly for everyone.
3.57pm BST
3.56pm BST
Crumbs, the Dow is now down over 400 points at a new five-week low, a clear sign that trade war fears are mounting.
Nearly every share on the index is down. Intel (-6%) and Apple (-2.8%) are the top fallers - technology companies will be badly hit by a deeper trade war.
3.27pm BST
Sell-offs have a nasty habit of becoming contagious.
Wall Street's weak open has hurt sentiment in Europe, dragging shares lower in mid-afternoon trading.
There's really only one game in town today and it's a binary one of 'chicken', with the global economy at stake. Either there will be a China-U.S. trade deal or there will not. Deep falls across most global stock market regions suggest that Thursday, the first day of talks scheduled with China's Vice Premier Liu He, is more important than the second, set for Friday
3.09pm BST
This market turbulence is not good news for Uber, as it tries to price its stock market flotation today.
Uber had been aiming to float at between $44 and $50 per share, valuing the company at between $80bn and $90bn.
Happy Uber pricing day... pic.twitter.com/sXcGmyp5wC
3.05pm BST
2.50pm BST
No sign of a bounce yet. Instead, the Dow is still sliding, now down 275 points or 1% at 25,692.
That's its lowest level in over five weeks.
2.36pm BST
Ouch! Wall Street has opened in the red, as trade war fears ripple across New York trading floors.
2.05pm BST
European stock markets are falling deeper into the red, as investors continue to crane their necks towards Washington for trade war news.
Germany's DAX has shed 1%, falling to a three-week low. Major international firms such as tire maker Continental (-4.9%), pharmaceuticals firm Bayer (-3.6%) and car producer BMW (-2.7%).
1.47pm BST
Also just in: America's trade deficit with China has fallen, giving the White House a boost ahead of today's negotiations.
The deficit with China fell by $1.9 billion to $28.3bn in March, the Commerce Department says. Exports from the US to China increased by $1.4bn to $10.5bn, while imports decreased $0.5bn to $38.8 billion.
1.33pm BST
Just in: The number of Americans filing new claims for unemployment benefit has fallen slightly.
Around 228,000 US citizens filed new 'initial claims' last week, down from 230,000 in the previous seven days. That's a low figure by historical standards, suggesting the labor market is robust.
1.29pm BST
With an hour to go, Wall Street is bracing for losses at the open.
Dow futures getting whacked again. implied open -104pts pic.twitter.com/uGu5FIBA6w
1.28pm BST
Emerging market currencies are having a bad day:
Escalating trade tensions have punctured emerging-markets currencies today, led by declines in the Korean won, Turkish lira & Chinese yuan. An MSCI basket of EM currencies fell the most since December at one point this morning. pic.twitter.com/YHOO80taRS
1.06pm BST
Stefan Legge, a trade expert from the University of St Gallen in Switzerland, reckons Donald Trump's trade strategy is closely linked to the looming 2020 presidential election.
Legge believes that a properly "comprehensive" trade deal with China was never really on the table, given the gulf between the two sides:
President Xi cannot and will not make significant concessions on state subsidies, restrictions on market access, or initiatives like "Made in China 2025.
That is why the US President is unlikely to sign a superficial deal with China - regardless of what his advisers suggest. Democratic presidential hopefuls are puzzled by the strong economy and would like to get tough on China themselves. Trump is unlikely to hand them the possibility to criticize him on being soft on China.
Where do we go then if neither President Trump nor Xi is willing to sign a deal? My best guess is that the two countries will not reach an agreement and as long as both economies can handle the pressure (with a little help from stimulus packages on both sides of the Pacific), the trade war is likely to continue. China and the US might well be deep enough into Thucydides' Trap so that the time is over for much cooperation anymore.
12.46pm BST
Brookings Institute expert David Dollar has another theory: China's politburo didn't approve of the draft deal cooked up with the US.
More likely that senior leaders did not like what Chinese negotiators had cooked up https://t.co/HL40bEqrx0
12.36pm BST
The Wall Street Journal reports today that China decided to renege on some of its trade commitments because they thought Donald Trump was fretting about the US economy.
Trump's repeated attacks on the US Federal Reserve, and his calls for lower interest rates, apparently persuaded Beijing that the White House desperate for a growth boost.
The new hard line taken by China in trade talks-surprising the White House and threatening to derail negotiations-came after Beijing interpreted recent statements and actions by President Trump as a sign the U.S. was ready to make concessions, said people familiar with the thinking of the Chinese side.
11.34am BST
Scott Kennedy, a China trade and economics expert at the Center for Strategic and International Studies, thinks Beijing may have miscalculated by rowing back on parts of the draft agreement drawn up in recent weeks.
Kennedy told the AFP newswire that:
"It turns out the Chinese had pulled out an eraser and started taking back things that they had offered.
They didn't realize when they pulled their concessions off the table that the administration would have the reaction that it did.
10.41am BST
Carmakers, technology firms and luxury goods makers could all be hit hard if Donald Trump hikes Chinese tariffs overnight, warns Fiona Cincotta of City Index.
The US-China trade talks seem to be on the brink of collapse and the next round in which the US more than doubles the tariffs on already taxed imports could start as early as Friday. China has already promised to respond in kind, which will be particularly bad news for US car makers, Apple and luxury goods producers.
There is still a small window of opportunity to avoid the head-on collision with a round of talks between the two sides which is due to start in Washington on Thursday, but that seems unlikely as comments from President Trump are becoming increasingly hostile towards China.
10.25am BST
Wall Street is expected to fall when trading begins in four hours time, following losses in Asia and Europe today.
Stocks have endured a major sell-off this morning as trade tensions between the US and China have ratcheted up. President Trump claims that China' broke the deal', and traders have taken that as a sign that the relationship between Washington DC and Beijing is going to get worse. Trade discussions between the two sides will continue today, but investors aren't holding out much hope. Mr Trump is not a man to back down, and it looks likely that this trade spat will move to the next level.
We are expecting the Dow Jones to open 132 points lower at 25,835 and we are calling the S&P 500 down 15 points at 2,864.
10.14am BST
China's commerce ministry is making it abundantly clear that it will retaliate on Friday, if America imposes higher tariffs on thousands of its products.
At today's briefing in Beijing, spokesman Gao Feng said preparations are in place for "all kinds of possible outcomes".
China's MOFCOM: Watch MOFCOM website for retaliation detail
Still can kicking? pic.twitter.com/DKUJjU9Hsx
China is fully prepared to defend its interests in its trade war with the United States, but hopes the United States can resolve problems through dialogue instead of unilateral steps, the Chinese commerce ministry said on Thursday.
The comments came as a Chinese delegation led by Vice Premier Liu He was set to hold talks in Washington on Thursday and Friday aimed at salvaging a deal that appeared to be unravelling after U.S. officials accused China of backtracking on earlier commitments and President Donald Trump threatened to hike tariffs on Chinese goods on Friday.
Gao (MOFCOM): China will & is able to defend its interests
China won't give in to any pressure
China hopes US respects China's sincerity
Tariffs not right way to solve problems
Watch MOFCOM website for retaliation details
10.02am BST
Paul Donovan, chief economist at UBS Wealth Management, points out that US companies could try to dodge new tariffs on Chinese goods:
Chinese Vice Premier Liu arrives in Washington for trade talks. At midnight, US consumers of goods partially made in China will be hit with higher US taxes - unless they can avoid paying the tax. For example, US firms could shift production to Canada, import parts from China, and export finished product from Canada to the US (paying no taxes).
Markets are not pricing in a collapse in trade talks - that would mean a far bigger equity loss. Instead, markets seem to assume a temporary tax increase [higher tariffs] with continued negotiations.
Economically, the longer there is uncertainty the greater the economic damage (regardless of whether there is a successful conclusion to the talks).
9.29am BST
The Japanese yen has hit a three-month high, as traders pile into safe-haven assets.
The yen, traditionally popular when investors get the jitters, strengthened to 109.58 to the US dollar, a level last seen in February.
Plus haut de 3 mois pour le yen face au dollar #riskoff #USDJPY bien venu chercher le point bas de mars --> pic.twitter.com/7NqetSxLgN
9.12am BST
European stock markets are dripping electronic red ink again this morning.
8.37am BST
Newsflash: China's commerce ministry has confirmed that vice-premier Liu He is on his way to Washington, with a delegation of officials, for another round of trade talks.
Spokesman Gao Feng also warned that China has the "determination and capacity" to defend its interests -- confirmation that it plans to retaliate if the US hikes tariffs tomorrow.
- China's Commerce Ministry: China Is Fully Prepared To Defend Its Interests, Has Determination And Capacity To Do So
- Trade Delegation Has Already Left Beijing For US
- Vice Premier Liu Visit To The US Shows China's Sincerity
- China's Commerce Ministry: China Opposes Unilaterally Imposed Tariffs
- There Is No Winner In A Trade War
- Hopes US Meets China Halfway
- Hopes US Can Resolve Problem Through Dialogue Instead Of Unilateral Steps
8.33am BST
Financial stocks, miners, car makers and industrial companies are leading today's sell-off in Europe.
8.15am BST
The next few hours will be "absolutely crucial" for the markets, says Han Tan, market analyst at FXTM.
The paramount question of the day is - can the US and China strike a trade deal by midnight Friday in Washington, or will heightened tariffs kick in by 12:01AM? [or 5.10am BST tomorrow].
Given the looming deadline, hope for a trade resolution appears to be waning. Asian currencies are falling against the US Dollar, while the Japanese Yen is gaining 0.1 percent at the time of writing. Risk-off mood is clearly taking a hold on equity markets across the region, as they are all trading in negative territory on Thursday morning, except for Australian and Thai stocks.
8.07am BST
The Europe-wide Stoxx 600 index has shed 1% in early trading, hitting a five-week low.
There are losses in Germany (-0.7%), France (-1.2%) and Spain (-0.7%).
8.04am BST
London's stock market is also being dragged down by several shares going 'ex-dividend' (meaning it's too late to qualify for the next payout to shareholders)
Ex-divs today;
Centrica 8%, Admiral 3.1%, BP 1.5%, Hiscox 1.4%, 9pts coming of #FTSE100; #FTSE250: Card Factory 3.3%, Polymetal 3%, Ibstock 2.5%, AG Baar 1.6%, Greencoat UK Wind 1.3%
8.02am BST
European markets have opened in the red, dogged by trade war jitters.
In London, the FTSE 100 has tumbled by 51 points at the start of trading, down 0.6%, to 7219. That's a new five-week low.
7.58am BST
Asian stock markets have sunk to six-week lows today, amid anxiety over the trade talks.
Is Liu He really coming to do a deal? I think probably it's case of gaining a reprieve in order to avert the rise in tariffs. It looks like we are yet a wee bit away from a comprehensive trade deal.
But the vice-premier's visit and the prospect of tariffs being hiked is all a bit of an unknown right now and the market positioning is defensive as a result, but not yet into full selloff mode. Even if there it's no go on trade, the dovish Fed will mean we shouldn't see a selloff like we saw in Q4 2018.
7.51am BST
Last night, president Trump accused China of 'breaking the deal' -- a sign that today's talks with Liu He's delegation could be bruising.
"By the way, you see the tariffs we're doing?
Because they broke the deal. They broke the deal. So they're flying in, the vice premier tomorrow's flying in - good man - but they broke the deal. They can't do that, so they'll be paying."
Related: 'They'll be paying': Trump blasts China as US prepares to raise trade tariffs
7.41am BST
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Outside of the knowledge of the craziness of sport, the last 24-48 hours has taught us that markets have no greater insight as to whether this week's trade developments are just hardball from Trump or the start of a very real threat to the global growth narrative.
If it's the latter then you can't help but feel that markets look extremely complacent at this point. However if it's just hardball negotiation en route to a deal then we'll likely resume the rally.
#VIX , which is a reflection of estimated future volatility, has broken higher through 18.33 (March highs) after closing above the falling trend line from early 2019. Stopped short of the late-January highs though. Anticipation of volatility is definitely picking up pic.twitter.com/J5JfN9S2I6
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