Trump Moves to Retaliate Against China's Retaliation for New Tariffs

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The US, the world's largest economy, has a trade deficit of nearly 500 billion US dollars with China, the world's second largest economy.

China's commerce ministry reacted swiftly, saying: "If the United States acts irrationally and issues a list, China will have no choice but to take comprehensive measures of a corresponding number and quality and take strong, powerful countermeasures".

"Such a practice of extreme pressure and blackmailing deviates from the consensus reached by both sides on multiple occasions", the ministry said in a statement.

The US dollar fell 0.75 percent to ¥109.715 following Trump's tariff comments. It showed a willingness to do that to South Korean businesses past year during a period of tension between the two Asian countries. "One of the big fears is, clearly, you derail the Chinese growth story you impact earnings on US stocks, and the air fizzles out of the balloon". Boeing's stock shed 4.3 percent, Caterpillar 4 percent and GE 2.2 percent.

"President Trump will have the backs of all Americans who may be targeted by Chinese actions and with respect to the farmers in Iowa or any other state", Navarro said.

In a meeting he had last month with President Trump and his chief economic advisor Lawrence Kudlow, Apple CEO Tim Cook explained that placing tariffs on Chinese imports is similar to taxing the American consumer.

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Trump added that if Beijing hit back at this latest manoeuvre, the U.S. would find another $200 billion worth of goods to impose tariffs on.

The president said the move was in retaliation to Beijing's decision to impose tariffs on $50 billion in USA goods, matching the first set of tariffs imposed by Trump. The S&P 500 was set to open lower by about 1% after heavy overnight selling dropped China's Shanghai Composite (-3.78%) to its lowest level in two years.

On Friday, the United States made a decision to impose 25% tariffs on $50bn of Chinese products. The first round is to take effect on July 6. Trump has tried to throw a lifeline to ZTE, which has been struggling to survive under USA sanctions. "President Trump has a great relationship with President Xi" Jinping of China.

The Director of White House National Trade Council, Peter Navarro, told reporters Tuesday the White House has given China every opportunity to change its "aggressive behavior". "This trade dispute will lead to relatively small effects in two economies that collectively add up to about $30 trillion in annual GDP".

Pompeo on Monday described US actions as "economic diplomacy, " which, when done right, strengthens national security and worldwide alliances, he added. -China trade spat escalated and base metal prices slid.

Mr. Navarro said China is seeking by 2025 to control 70 percent of USA industries such as aerospace, agricultural machinery, artificial intelligence, biotech, business application software, electronics, new generation IT, precision farming, robotics, and satellite communications.