From Newsmax

Sending Wall Street into a slide, China announced higher tariffs Monday on $60 billion worth of American goods in retaliation for President Donald Trump’s latest penalties on Chinese products.

Duties of 5% to 25% will take effect on June 1 on about 5,200 American products, including batteries, spinach and coffee, China’s Finance Ministry said.

With investors worried about the potential economic damage on all sides from the escalating trade war, the Dow Jones Industrial Average fell 617 points, or 2.4%, and the technology-heavy Nasdaq plunged 270 points, or 3.4%, its biggest drop of the year. Earlier, stocks fell in Europe and Asia.

“We appear to be in a slow-motion train wreck, with both sides sticking to their positions,” said William Reinsch, a trade analyst at the Center for Strategic and International Studies and a former U.S. trade official. “As is often the case, however, the losers will not be the negotiators or presidents, but the people.”

Beijing’s move came after the U.S. raised duties Friday on $200 billion of Chinese imports to 25%, up from 10%. In doing so, American officials accused China of backtracking on commitments it made in earlier negotiations. The same day, trade talks between the two countries broke up without an agreement.

On Twitter, Trump warned Xi that China “will be hurt very badly” if it doesn’t agree to a trade deal. Trump tweeted that Beijing “had a great deal, almost completed, & you backed out!”

The rising trade hostilities could damage the economies of both countries. The tariff increases already in place have disrupted trade in such American products as soybeans and medical equipment and sent shockwaves through other Asian economies that supply Chinese factories.

Still, the two countries have given themselves something of an escape hatch: The higher Chinese tariffs don’t kick in for 2½ weeks. The U.S. increases apply to Chinese goods shipped since Friday, and those shipments will take about three weeks to arrive at U.S. seaports and become subject to the higher charges.

Also, both countries have indicated more talks are likely. Top White House economic adviser Larry Kudlow said on Sunday that China has invited U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin to Beijing. But nothing has been scheduled. And Trump said Monday that he expects to meet Chinese President Xi Jinping in late June at the G-20 summit in Osaka, Japan.

The president has repeatedly insisted that increased tariffs on Chinese goods don’t hurt American consumers. But Kudlow, head of the president’s National Economic Council, acknowledged over the weekend that U.S. consumers and businesses will bear some of the costs.

“Both sides will pay,” he told Fox News.

In the U.S., prices of soybeans, targeted by Chinese tariffs last year, fell Monday to a 10-year low on fears of a protracted trade war.

In a statement, American Soybean Association President Davie Stevens, a soybean farmer from Clinton, Kentucky, expressed frustration that “the U.S. has been at the table with China 11 times now and still has not closed the deal. What that means for soybean growers is that we’re losing. Losing a valuable market, losing stable pricing, losing an opportunity to support our families and our communities.”

Trump told reporters Monday that a new program to relieve U.S. farmers’ pain is “being devised right now” and predicted that they will be “very happy.” The administration last year handed farmers aid worth $11 billion to offset losses from trade conflicts.

The president’s allies in Congress scrambled to limit the damage to farm country.

Republican Sen. Chuck Grassley of Iowa said it is time for U.S. allies to “get in the game” to push China to the negotiating table. “China needs to get with it,” he said. “You can’t move these goalposts like they’re moving them and expect to be respected.”

The highest tariffs announced by China will apply to industrial chemicals, electronic equipment, precision machinery and hundreds of food products.

Beijing is running out of U.S. imports to penalize because of the lopsided trade balance between the world’s two largest economies. Chinese regulators have instead targeted American companies in China by slowing down the clearing of shipments through customs and the processing of business licenses.

Oxford Economics calculated that the higher tariffs will reduce the U.S. economy by 0.3% in 2020, a loss of $490 per American household.

Similarly, forecasters have warned that the U.S. tariff increases could set back a Chinese recovery that had appeared to be gaining traction. Growth in the world’s second-largest economy during the January-through-March period held steady at 6.4% compared with a year earlier, supported by higher government spending and bank lending.

The tensions “raise fresh doubts about this recovery path,” Morgan Stanley economists said.

The latest U.S. duties could knock 0.5 percentage points off annual Chinese economic growth, and that could widen to 1 percentage point if both sides extend penalties to all of each other’s exports, economists say. That would pull annual growth below 6%, raising the risk of politically dangerous job losses.

China’s state media tried to reassure businesses and consumers that the ruling Communist Party has the means to respond.

“There is nothing to be afraid of,” said the party newspaper People’s Daily. “The U.S.-instigated trade war against China is just a hurdle in China’s development process. It is no big deal.”

Trump has threatened to extend tariffs to the remaining $300 billion or so in Chinese tariffs that haven’t been targeted yet, but told reporters Monday: “I have not made that decision yet.”

The president started raising tariffs last July over complaints China steals or pressures foreign companies to hand over technology and unfairly subsidizes Chinese businesses that are striving to become global leaders in robotics and other technology.

A stumbling block has been U.S. insistence on an enforcement mechanism with penalties to ensure Beijing carries out its commitments.

Trump said on Monday that his administration was planning to provide about $15 billion in aid to help U.S. farmers whose products may be targeted with tariffs by China amid a deepening trade war.

“We’re going to take the highest year, the biggest purchase that China has ever made with our farmers, which is about $15 billion, and do something reciprocal to our farmers so our farmers can do well,” Trump told reporters at the White House.

He did not provide any more details on what kind of an aid package it would be.

American farmers, a key constituency of Trump, have been among the hardest hit in the trade war. Soybeans are the most valuable U.S. farm export, and shipments to China dropped to a 16-year low in 2018, while soybean futures prices last week fell this week to 11-year lows.

U.S. Agriculture Secretary Sonny Perdue said on Friday that Trump had asked him to create a plan to help American farmers cope with the heavy impact of the U.S.-China trade war on agriculture.

A new aid program would be the second round of assistance for farmers, after the Department of Agriculture’s $12 billion plan last year to compensate for lower prices for farm goods and lost sales stemming from trade disputes with China and other nations.

“Out of the billions of dollars that we’re taking (in in tariffs on Chinese imports), a small portion of that will be going to our farmers, because China will be retaliating, probably to a certain extent, against our farmers,” Trump said.

On Monday, China said it would impose higher tariffs on a range of U.S. goods, including frozen vegetables and liquefied natural gas, striking back in its trade war with Washington after Trump warned it not to.

Last year Beijing imposed tariffs on imports of U.S. agricultural goods, including soybeans, grain sorghum and pork as retribution for U.S. levies. Soybean exports to China have plummeted over 90 percent and sales of U.S. soybeans elsewhere failed to make up for the loss.

While farmers have largely remained supportive of Trump, many have called for an imminent end to the trade dispute, which propelled farm debt to the highest levels in decades and worsened credit conditions for the rural economy.

Trump also said Monday afternoon that he will meet with Chinese President Xi Jinping and Russian President Vladimir Putin at the G20 gathering in Japan next month.

Trump said his meeting with Xi could be fruitful as their trade dispute escalated after failing to reach agreement during high-level talks last week.Trump warned China against “substantial” retaliation for new U.S. tariffs after his escalating trade war with Beijing rocked global financial markets.

“There can be some retaliation but it can’t be very substantial,” Trump told reporters on Monday during a meeting with Hungarian Prime Minister Viktor Orban.

Earlier Monday, China announced it would impose higher tariffs on a range of U.S. goods including frozen vegetables and liquefied natural gas, striking back in its trade war with Washington after Trump warned it not to.

The move, widely expected after the United States last week raised tariffs on $200 billion in Chinese imports, heightened fears the world’s two largest economies were spiraling into a no-holds-barred dispute that could derail the global economy.

China’s finance ministry said it plans to set import tariffs ranging from 5% to 25% on 5,140 U.S. products on a revised $60 billion target list. It said the tariffs will take effect on June 1.

“China’s adjustment on additional tariffs is a response to U.S. unilateralism and protectionism,” the ministry said. “China hopes the U.S. will get back to the right track of bilateral trade and economic consultations and meet with China halfway.”

The White House and U.S. Trade Representative’s office did not immediately respond to requests for comment.

Global equities, which slumped last week on the escalating tensions, fell sharply, with major U.S. indexes down more than 2 percent. Investors sought safety in U.S. bonds while the U.S. dollar slipped against a basket of currencies.

“It’s clear that there is a lot of nervousness around the U.S.-China trade negotiations and concern that it’s really deteriorating pretty significantly, and that’s impacting all areas of markets,” said Kristina Hooper, chief global market strategist at Invesco in New York.

Earlier on Monday, Trump told China not to intensify the trade dispute and urged its leaders, including President Xi Jinping, to continue to work to reach a deal. “China should not retaliate-will only get worse,” he said on Twitter.

“I say openly to President Xi & all of my many friends in China that China will be hurt very badly if you don’t make a deal because companies will be forced to leave China for other countries,” Trump wrote.

The U.S. president, who has embraced protectionism as part of an “America First” agenda, stepped up his verbal attacks on China on Friday after two days of high-level trade talks in Washington ended with the two sides at an apparent stalemate.

STEADY DRUM BEAT

Trump has accused Beijing of reneging on commitments it made during months of trade negotiations, which Beijing has denied.

China tried to delete commitments from a draft agreement that its laws would be changed to enact new policies on issues from intellectual property protection to forced technology transfers. That dealt a major setback to the talks.

In the middle of the talks last week, Trump hiked tariffs on Chinese goods to 25% from 10%. Those tariffs affect 5,700 categories of Chinese products including internet modems, routers and similar devices.

In the wake of the failure of the talks, Trump ordered U.S. Trade Representative Robert Lighthizer to begin the process of imposing tariffs on all remaining imports from China, a move that would affect another $300 billion worth of goods.

China said it would “never surrender” to external pressure.

Chinese state media kept up a steady drum beat of strongly worded commentary on Monday, reiterating that China’s door to talks was always open, but vowing to defend the country’s interests and dignity.

In a commentary, state television said the effect on the Chinese economy from the U.S. tariffs was “totally controllable.”

“It’s no big deal. China is bound to turn crisis to opportunity and use this to test its abilities, to make the country even stronger.”

Trump has defended the U.S. tariff hike and said he was in “absolutely no rush” to finalize a deal with China.

Despite Trump’s insistence China will absorb the cost of the tariffs, it is U.S. businesses that will pay them and likely pass them on to consumers. It may take three or four months for that pain to be felt, economists and industry consultants say.

At the same time, the Trump administration has rolled out up to $12 billion in aid for U.S. farmers hurt by Chinese tariffs against U.S. soybeans and other agricultural products during the 10-month trade war, and indicated that more could be on the way.

Separately, the U.S. Commerce Department said on Monday six Chinese technology entities were among those it had banned from exporting sensitive U.S. technologies and other goods.

Top White House economic adviser Larry Kudlow said on Sunday there was a “strong possibility” Trump will meet China’s Xi at a G20 summit in Japan in late 

Reuters and The Associated Press contributed.

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