US president sends series of tweets and suggests agreement might be delayed

This article is more than 1 year old

This article is more than 1 year old

Markets have fallen sharply across Europe after Donald Trump reignited trade war fears with a series of tweets attacking China’s handling of negotiations with the US.

With a two-day meeting between the countries’ trade teams due to begin in Shanghai, the US president said China’s economy was “doing very badly” and added negotiators “just don’t come through” on agreements, including promises to buy US farm goods.

Donald J. Trump (@realDonaldTrump) China is doing very badly, worst year in 27 - was supposed to start buying our agricultural product now - no signs that they are doing so. That is the problem with China, they just don’t come through. Our Economy has become MUCH larger than the Chinese Economy is last 3 years....

Trump also suggested China might choose to delay a trade agreement until after the US 2020 presidential election to see if a Democrat wins.

“Then they could make a GREAT deal, like in past 30 years and continue to ripoff the USA,” Trump tweeted. “The problem with them waiting, however, is that if & when I win, the deal that they get will be much tougher than what we are negotiating now … or no deal at all.”

Donald J. Trump (@realDonaldTrump) ...to ripoff the USA, even bigger and better than ever before. The problem with them waiting, however, is that if & when I win, the deal that they get will be much tougher than what we are negotiating now...or no deal at all. We have all the cards, our past leaders never got it!

Germany’s DAX index, already weakened by disappointing company results, fell 2.2% after Trump’s tirade. The indexis particularly sensitive to trade tensions because of German companies’ reliance on exports.

In France, the CAC 40 fell 1.6% while Spain’s IBEX dropped 2.5% and the Italian FTSE MIB index lost almost 2%. The pan-European Stoxx 600 index fell 1.5% reflecting the falls in Europe’s major markets.

The UK’s FTSE 100’s 0.5% decline was cushioned by the weak pound, which increases the foreign earnings of the global companies in the index when translated into sterling.

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US stocks also fell in early trading on Wall Street in response to Trump’s tweets and ahead of the Federal Reserve’s monetary policy meeting on Wednesday after reaching record highs on Friday.

The benchmark S&P 500 index was down 0.4% as shares in tech stocks fell, led by Apple. The iPhone maker’s shares are sensitive to US-China trade friction because it depends on China for much of its manufacturing as well as product sales.

Connor Campbell, an analyst at Spreadex, a spread-betting firm, said: “Trump poured a tanker full of cold water on the embers of the market’s trade optimism with a series of inflammatory tweets.”

Trump had declared the trade talks back on track in June but last week he criticised China for “cheating the system at the expense of the US”.