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Trade war: China pulls out of talks with the US over tariffs

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Trump Xi Trade War
US President Donald Trump, left, and Chinese leader Xi
Jinping.

Business
Insider


  • New US tariffs on $200 billion worth of Chinese imports
    kicked in on Monday.
  • China has pulled out of trade talks with the US in response
    and attacked the Trump administration’s “trade bullyism” in a
    white paper.
  • Asian and European markets have opened lower on Monday, with
    investors concerned that the trade war “may enter phase III.”
  • You can follow
    live market reactions on Markets Insider.

LONDON — European and Asian markets were lower on Monday after
China said it won’t negotiate with the US on trade if the Trump
administration continues to threaten higher tariffs.

China published a white paper on Monday that attacked the
“protectionist practices” and “trade bullyism practices of the
U.S. administration,” according
to state-run Chinese news service Xinhua.

Beijing said that the Trump administration has “abandoned the
fundamental norms of mutual respect and equal consultation that
guide international relations.”
Bloomberg reported
that the white paper stated that trade
negotiations “cannot be carried out under the threat of tariffs,”
suggesting talks between the two sides are unlikely.

The white paper came as a fresh round of tariffs came into force
against Chinese goods coming into the US. The duties on $200
billion worth of imports came into effect just after midnight on
Monday morning Washington time. China has promised to respond
with tariffs on $60 billion worth of US imports.

“While these actions seem to be already priced in, investors are
becoming increasingly worried that the trade war may enter phase
III,” Hussein Sayed, the chief market strategist at trading
platform FXTM, said in an email on Monday morning. “With Beijing
canceling planned trade talks on Saturday and the
US State Department imposing sanctions against China’s

defense
agency
, relations between the two largest economies in the
world may further deteriorate.”

Markets reacted negatively to the most recent developments in the
tit-for-tat trade dispute with the US and China. Stock markets in
China and Japan are closed for a local holiday on Monday but Hong
Kong’s Hang Seng index remains open and was down by
1.66% at 8.30 a.m. BST (3.30 a.m. ET).

Negative sentiment spread to Europe, with stock indexes opening
lower there too. Germany’s Dax was
down by 0.45%,
France’s CAC
40 was down by 0.25%
, and Britain’s
FTSE 100 was down by 0.17%
after around half an hour of trade
in Europe.

“The implementation of President Trump’s tariffs and the Chinese
reaction to cancel talks in the face of the US President’s
decision should force investors to come to grip with reality,”
Konstantinos Anthis, head of research at ADSS, said in an email
on Monday. “However, whether this will take a meaningful toll on
the upwards trend in place or will only trigger a short-term
correction remains to be seen.”

Separately on Monday, Australian investment bank Macquarie said
that
Mexico stands to benefit the most
from rising trade tensions
between the US and China.

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