US-China trade war heats up

Trump said Monday that China called U.S. negotiators on Sunday to say they wanted to negotiate, following a recent escalation in the trade war between Washington and Beijing. Trump tweeted last Friday that America will hike tariffs on $250 billion worth of Chinese goods to 30% from 25%. Tariffs on another $300 billion in Chinese products will also go up to 15% from 10%, Trump said. The levies on the $250 billion worth of goods are scheduled to kick in Oct. 1, while the duties on the $300 billion are set to go into effect in two stages on Sept. 1 and Dec. 15. At the G-7 summit over the weekend in France, Trump said he regrets not raising tariffs even higher, adding that he could declare the U.S.-China trade war a national emergency. Beijing unveiled new tariffs last Friday on $75 billion of U.S. goods. That was in response to Trump's surprise announcement earlier this month that the U.S. would impose duties on another $300 billion of Chinese goods — some of these items have since been delayed to December or removed from the list. "This tit-for-tat escalation shows how unlikely a trade deal and de-escalation have become," Louis Kuijs, head of Asia economics at Oxford Economics, wrote in a note. "It is now unlikely that the existing and planned trade restrictions will be removed any time soon, while other kinds of restrictions may also be introduced."

Markets stateside were sent tumbling last Friday after Trump ordered U.S. firms to "start looking for an alternative to China," with the Dow Jones Industrial Average plunging more than 600 points. "In the last 20 years, U.S. corporates have built big positions in China," Richard Martin, managing director at IMA Asia, told CNBC's "Squawk Box" on Monday. He added that American businesses are now "nervous on two levels." "It's not only what Trump might do with his emergency powers, it's the response that you'll get in China," Martin explained. "Not necessarily just the response from the government, it's the response from ordinary people and companies in China who might say 'the U.S. firms are no longer our friend.'"

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