Dow plummets 500 points after China announces new tariffs

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China announced tariffs worth $50 billion on a series of USA products including soybeans, whiskey and cars.

USTR did include some key consumer products from China, including flat-panel television sets and motor vehicles, both electric and gasoline-powered with engines of 3 litres or less.

The biggest worry for investors is that an escalating trade war will derail a global economy that is largely growing in unison.

European stocks also fell sharply. Those tariffs are likely in response to new American tariffs on Chinese aluminum and steel. The US government said it will hold a public hearing for US businesses about its plans next month. A deputy finance minister, Zhu Guangyao, appealed to Washington to "work in a constructive manner" and avoid hurting both countries but warned against expecting Beijing to back down.

Tommy Xie, an economist at Singapore-based bank OCBC, said it was unlikely that the latest tariffs from either side would come into force for another couple of months.

Industries including aerospace, information and communications technology, robotics and machinery were among those targeted by the USA trade representative on Tuesday. Others would target medical equipment, medicine and educational material, such as bookbinding equipment.

U.S. Commerce Secretary Wilbur Ross brushed off concern about a trade war.

Some Chinese commentators, however, suggested that Beijing considered the USA move a serious political provocation and would be reluctant to back down.

USA producers looking to replace their exports to China could sell more soybeans in Canada and other countries, displacing Canadian soybeans.

The real upshot for carmakers in the United States is that companies may think twice about any future imports from China.

Earlier in the day, wary investors sold off industrial giants that depend heavily on China for revenue, including Apple, Boeing, Caterpillar and Intel.

Investors may have also been comforted when Larry Kudlow, head of President Trump's National Economic Council, said the administration was not angling for a trade war.

But Trump is also focused on his promise to voters to reinvigorate USA manufacturing jobs. Beijing has called the metal tariffs an abuse of global trade rules.

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One of the notable casualties of the Chinese tariffs is a U.S. company that's owned by China.

Trade tensions between China and the U.S. have been ramped up after Beijing responded to United States plans for putting new taxes on hundreds of Chinese imports.

The first major trade action against China comes at the beginning of the year, when the USA announces a 30% tariff on imported solar panels - most of which come from China - and taxes on large residential washing machines starting at 20%.

But Chinese government officials dismissed the allegations on Wednesday.

American companies have long chafed under Chinese regulations that require them to operate through local partners and share technology with potential competitors in exchange for market access.

The increasingly tense back-and-forth between Washington and Beijing over trade is freaking out markets.

Hong Kong's Hang Seng slumped 2.2 percent with the decline accelerating in the final minutes of trading after Beijing announced specifics of its tariff hikes.

This morning, USA oil futures dipped less than 1% to about $63 per barrel.

Deere & Co. fell 4.3 per cent and Caterpillar dropped nearly 3 per cent. Boeing was down 3.3 per cent.

It is the country's largest export market, but Canada is a small player compared with global leaders like Brazil, the United States and Argentina.

"It's only logical to see profit-taking in light of looming trade tensions and possible financial market turbulence", said Eugen Weinberg, head of commodities research at Commerzbank in Frankfurt.

Soybeans on the Chicago Board of Trade immediately dropped as much as 5.3 percent, while wheat and corn futures also slid, Bloomberg reported.