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Trump tariffs: Markets fall as trade war fears mount Trump tariffs: Markets fall as trade war fears mount
(35 minutes later)
Stock markets have fallen around the world in the wake of President Trump's latest tariffs threat to China.Stock markets have fallen around the world in the wake of President Trump's latest tariffs threat to China.
The Dow Jones was down more than 300 points (1.6%) when New York trading opened and Asian and European markets had also fallen sharply earlier. The Dow Jones was down more than 300 points, or 1.6%, at the open after Asian and European markets fell sharply earlier.
Mr Trump has threatened to put tariffs on an extra $200bn (£141bn) of Chinese goods, sparking fears of a trade war.Mr Trump has threatened to put tariffs on an extra $200bn (£141bn) of Chinese goods, sparking fears of a trade war.
The US president said the tariffs would be imposed if China "refuses to change its practices".The US president said the tariffs would be imposed if China "refuses to change its practices".
He condemned China's "unfair practices related to the acquisition of American intellectual property and technology" and added: "Rather than altering those practices, it is now threatening United States companies, workers, and farmers who have done nothing wrong."He condemned China's "unfair practices related to the acquisition of American intellectual property and technology" and added: "Rather than altering those practices, it is now threatening United States companies, workers, and farmers who have done nothing wrong."
The markets reacted badly with China's Shanghai Composite doing the worst in Asia, ending the day down 3.8%. In Europe, Germany's Dax index and France's Cac 40 were both down by about 1.5%. The markets reacted badly with China's Shanghai Composite faring the worst in Asia, ending the day down 3.8%. In Europe, Germany's Dax index and France's Cac 40 were both about 1.5% lower in afternoon trading.
Away from Mr Trump's dispute with China, Russia announced it would impose tariffs on certain American goods in response to the recent tariffs placed on steel and aluminium imports by the US. Away from Mr Trump's dispute with China, Russia said it would impose tariffs on certain American goods in response to the recent tariffs placed on steel and aluminium imports by the US.
Russia's Economy Minister, Maxim Oreshkin, said the tariffs would target goods of which the Russians already had domestic equivalents.Russia's Economy Minister, Maxim Oreshkin, said the tariffs would target goods of which the Russians already had domestic equivalents.
How did the latest spat unfold?How did the latest spat unfold?
Last week, Mr Trump confirmed that the US would impose 25% tariffs on $50bn worth of Chinese goods.Last week, Mr Trump confirmed that the US would impose 25% tariffs on $50bn worth of Chinese goods.
Beijing responded by saying it would hit 659 US products worth $50bn - including agricultural products, cars and marine products - with a similar tax.Beijing responded by saying it would hit 659 US products worth $50bn - including agricultural products, cars and marine products - with a similar tax.
Late on Monday, Mr Trump added that new tariffs would "go into effect if China refuses to change its practices, and also if it insists on going forward with the new tariffs that it has recently announced".Late on Monday, Mr Trump added that new tariffs would "go into effect if China refuses to change its practices, and also if it insists on going forward with the new tariffs that it has recently announced".
"If China increases its tariffs yet again, we will meet that action by pursuing additional tariffs on another $200bn of goods.""If China increases its tariffs yet again, we will meet that action by pursuing additional tariffs on another $200bn of goods."
China's commerce ministry reacted swiftly, saying: "If the US 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."China's commerce ministry reacted swiftly, saying: "If the US 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."
What do the experts say?
A paper published by Canadian think tank the CD Howe Institute suggests that Mr Trump's threats are having an effect on US manufacturing by using "uncertainty as a new weapon in trade protection".A paper published by Canadian think tank the CD Howe Institute suggests that Mr Trump's threats are having an effect on US manufacturing by using "uncertainty as a new weapon in trade protection".
The institute's Meredith Crowley and Dan Ciuriak have written a study in which they say uncertainty acts like a non-tariff barrier to impede trade and investment. Its study says that uncertainty acts like a non-tariff barrier to impede trade and investment by encouraging American companies to move factories back to the US and reduce incentives for US firms to invest abroad.
Its purpose is to force American companies to move manufacturing bases abroad back into the US and to reduce incentives for US firms to invest abroad.
Ronald Temple, head of US equities and co-head of multi-asset investing at Lazard Asset Management, said: "The post-war multi-lateral system largely rests on the US's credibility and its commitment to the rules and its allies.
"This credibility can be eroded by an approach that lacks clear objectives. It's getting harder for businesses and investors to shrug off this uncertainty."
How has the dispute escalated?How has the dispute escalated?
A potential political costA potential political cost
BBC economics correspondent Andrew WalkerBBC economics correspondent Andrew Walker
Being tough with China plays well with many of President Trump's supporters, actual and potential, at a time when he is looking ahead to the Congressional elections in November.Being tough with China plays well with many of President Trump's supporters, actual and potential, at a time when he is looking ahead to the Congressional elections in November.
It could also be that he thinks China will run out of US imports against which to retaliate.It could also be that he thinks China will run out of US imports against which to retaliate.
After all, the US sells a lot less to China than the other way around. After all, the US sells much less to China than the other way around.
But there is also a potential political cost for the president. Many in the Republican Party, who are more instinctively in favour of free trade, don't think this is the right way to tackle problems with China.But there is also a potential political cost for the president. Many in the Republican Party, who are more instinctively in favour of free trade, don't think this is the right way to tackle problems with China.
And as Mr Trump increases the range of goods subject to tariffs it becomes harder for American importers and consumers to avoid the cost by finding alternative suppliers.And as Mr Trump increases the range of goods subject to tariffs it becomes harder for American importers and consumers to avoid the cost by finding alternative suppliers.
In the separate dispute about steel and aluminium tariffs, he also has to contend with the politically targeted retaliation that other countries such as Mexico, Canada and the EU have in hand, intended to hit important states in the mid-term elections.In the separate dispute about steel and aluminium tariffs, he also has to contend with the politically targeted retaliation that other countries such as Mexico, Canada and the EU have in hand, intended to hit important states in the mid-term elections.
What products are affected?
The US tariffs previously announced affect more than 800 Chinese products from aircraft tyres to turbines and commercial dishwashers worth $34bn and are due to come into effect on 6 July.
In his latest statement, Mr Trump said that he had asked his advisers to identify additional Chinese products on which to impose new tariffs.
The White House says China encourages transfer of intellectual property - design and product ideas - to Chinese companies, through measures such as requiring that foreign firms share ownership with local partners to access the Chinese market.