Markets Right Now: Dow falls 500 points on trade jitters

Yuan Plunges U.S. Stock Futures Drop on Trade War Markets WrapMore

These, the USA contends, include hacking into US companies' computers to steal trade secrets, forcing foreign companies to hand over sensitive technology in exchange for access to Chinese markets and unfairly subsidizing Chinese tech firms. -China trade war are in shambles after the United States accused China of reneging on its commitments and prepared to raise import taxes on $200 billion worth of Chinese goods.

Beijing is wrestling with an internal conflict: It is eager to end a trade fight that has battered Chinese exporters, but it doesn't want to look like it's bowing to the Trump administration's demands for far-reaching concessions.

US officials said they expected that China's delegation would led again by Vice Premier Liu He, a confidante of Chinese President Xi Jinping. "First, focused on US domestic audiences, he wants to appear to be "tough" on China, and to maintain his image among domestic constituencies as a trade warrior fighting on behalf of the US", Geoffrey Gertz, a fellow at the Brookings Institution, told DW.

Gavekal Research's Arthur Kroeber, editor-in-chief of China Economic Quarterly, still thinks a deal is likely, noting the domestic pressure on both the White House and Chinese leader Xi Jinping to strike deal.

USA and Chinese trade officials are set to resume negotiations on Thursday and Friday in the hopes of striking a trade deal.

The Trump administration plans to increase duties on Chinese imports at 12:01 a.m. on May 10, Lighthizer said Monday. Still, the Chinese government did not provide details on exactly when talks would resume and who would be on China's negotiating team. Over the course of last week we have seen an erosion of commitments by China.

Needless to say, the damage to the Chinese economy would boomerang back to the US, slowing growth and presenting a series of headwinds for a variety of sectors.

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The stock market falls come after a period of strong first-quarter earnings for USA companies. Weakening economies and crashing equity markets in late 2018 were the main drivers for December's trade ceasefire. It adds that Trump is confident "his trade policies are bolstering the American economy, without any downside".

Treasury Secretary Steven Mnuchin attributed the strong growth to Trump's economic policies, including on trade. "That in our view is unacceptable".

Gregory Daco, chief USA economist at Oxford Economics, said markets had "become numb to the risks of escalating trade tensions, assuming that a comprehensive trade agreement was about to be signed".

An additional $325 billion worth of Chinese goods, he said, would face a 25 percent tariff "shortly" after that.

So, raising tariffs on China?

"The base case still remains we see a framework agreement reached, but the market is still re-pricing in the risk", Edward Moya of Oanda said in a report.

Also, to keep USA retail prices in check, the Trump administration has so far targeted goods for which China has a relatively low global market share. China's economy is decelerating; the International Monetary Fund expects Chinese economic growth to slip from 6.6% previous year to 6.3% in 2019 and 6.1% in 2020. Chinese Vice-Premier Liu He was scheduled to arrive in Washington on Wednesday with a delegation of about 100 people, but now China is considering delaying that trip, according to people familiar with the matter. -China trade negotiations. Despite the market drop, China's official media stayed silent on Trump's comments all morning. Reports about China's intentions have varied over the last few days: The Wall Street Journal reported Sunday that China was thinking about canceling the talks, but CNBC reported soon after that China was still preparing to make a trip to the us this week.

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