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With two tweets, Trump shatters historic calm in global markets

With two tweets, Trump shatters historic calm in global markets

Shares tumbled in Asia today after President Donald Trump threatened in a tweet to impose more tariffs on China, spooking investors who had been expecting good news on trade. He also said he would target a further $325 billion of Chinese goods with 25 percent tariffs "shortly".

"If the visit if formally cancelled, then Trump simply has to hike tariffs on the $200bn of goods to 25%", he said, a move that would exacerbate tightening of global financial conditions.

Despite the happy talk from Trump and others in recent days, the USA has become frustrated with China's backpedaling on some of its earlier commitments, including on the crucial matter of technology transfer, two people familiar with the situation said.

Chinese share benchmarks have plummeted more than 5% as threats by President Donald Trump to raise tariffs in the trade war with Beijing raised doubts over the likelihood of a deal between the two biggest economies.

Trump pushed back deadlines in January and March to raise tariffs in a bid to buy more time for negotiations. Washington already is charging 25 per cen duty on another $50 billion of Chinese imports.

Philip Levy, senior fellow at the Chicago Council on Global Affairs and a White House economist under President George W. Bush, said the talks are too complicated for Trump's high-pressure tactics to work.

Trump has previously said a trade deal with China should be reached within the coming weeks but he is willing to walk away.

Last week, the mood among gold investors turned gloomy, pushing the metal to a four-month low after the U.S. Federal Reserve Chairman Jerome Powell dashed hopes of a rate cut this year.

Chinese media outlets have been told not to independently report on Trump's tweets, and instead adhere to any report from the official Xinhua news agency, said a source with direct knowledge of the matter.

The Shanghai Composite index sank 4.9%, briefly dipping 5% lower, and the Hang Seng in Hong Kong plunged 3.5%.

- Mr Trump is considering tariffs of around 25 per cent on imported cars and auto parts, based on a US Commerce Department study of whether such imports threaten US national security. "Despite the increase in gold prices (on Monday), technical analysis suggests that downward pressure on the yellow metal continues to manifest", OCBC analysts said in a research note, adding that most of the intra-day move was likely related to covering short positions and hedging against market risks.

The US government hit China with the most extensive tariffs, starting a trade war between the world's two largest economies.

Trump has portrayed his tariffs as a moneymaker for the United States and a benefit to the USA economy. That follows talks in April in Beijing that Treasury Secretary Steven Mnuchin called "productive".

"Raising tariffs means raising taxes on millions of American families and inviting further retaliation on American farmers", said Christin Fernandez, a spokeswoman for the Retail Industry Leaders Association.

Analysts said Trump's comments might be a negotiating tactic, but might also make Beijing reluctant to appear as if it was giving in to U.S. demands.

Negotiations about tariffs have been one of the remaining sticking points between the two sides.

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