President Trump threatens new tariffs on $200 billion in Chinese imports

However, many economists and businesses in the USA say the tariffs are likely to hurt some of the sectors the administration is trying to protect, which depend on China for parts or assembly.

US President Donald Trump threatened on Monday to impose a 10 percent tariff on $200 billion of Chinese goods, prompting a swift warning from Beijing of retaliation, as the trade conflict between the world's two biggest economies quickly escalated.

USA stocks stumbled early Tuesday, the morning after President Donald Trump threatened an all-out trade war with China. "China's government will step up an already intensive effort to determine whether Trump has the political strength to carry out his threats, while working to maximize pressure on USA interests to force him to back down and accept a compromise". "If they thought that they could buy us off cheap with a few extra products sold and allow them to continue to steal our intellectual property and crown jewels, that was a miscalculation".

The statement said that Trump asked the United States trade representative to determine $200 billion worth of Chinese goods that could be targeted by the 10 percent tariff.

US lawmakers are trying to block Trump's deal with ZTE.

The proposed measures caused upset on global stock markets on Tuesday, initially weakening both the U.S. dollar and the Chinese yuan.

The Canadian dollar, meanwhile, weakened to a one-year low of C$ 1.3237 overnight, before paring some of its losses on Tuesday, as investors anxious about Canada's own trade feud with the United States.

The Dow Jones industrial average and the Nasdaq composite index have each dropped more than 1.4 percent in early trading.

"Its psychological effects, its effects in increasing uncertainty, could be very serious and we're certainly getting later in a cycle of escalation", former U.S. Treasury Secretary Lawrence Summers said in an interview on Bloomberg Television.

"If the US loses its senses and publishes such a list, China will have to take comprehensive quantitative and qualitative measures", according to a statement from the Ministry of Commerce.

In a statement, Trump says he has an "excellent relationship" with Xi, "but the United States will no longer be taken advantage of on trade by China and other countries in the world".

Trump has raised trade tensions on other fronts as well.

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The intellectual property sanctions were the latest in a spate of protectionist measures unveiled by Trump in recent months that included tariffs on steel and aluminum imports to the USA and a tough rhetoric on trade negotiations from North America to Asia.

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The latest threat from Trump darkened an already negative mood in stock markets, according to Stephen Innes, head of Asia-Pacific trading at online futures brokerage Oanda.

Investor concerns surrounding the implications of confrontation between China and the USA returned just as the Federal Reserve this month signaled a faster pace of policy tightening and the European Central Bank said it will maintain it key rate until the second half of next year. "I suspect that we are not going to cause the economies to collapse", Blankfein added.

Beijing wants to "demonstrate that things will be done their way or not at all", said Christopher Balding, an economics professor at Shenzhen's HSBC Business School, who believes Chinese policymakers prefer demonstrations of "power and control" over "technical policy rightness".

President Donald Trump pumps his fist as he leaves a meeting Monday in the East Room of the White House in Washington.

US business groups said members were bracing for a backlash that would affect all American firms in China, not just in sectors facing tariffs.

The move followed tariffs applied last week on Dollars 50 billion in Chinese imports to the US.

"Everybody will have their eyes on the Russell 2000 because people begin to think small-cap US companies, that aren't subject to the winds of worldwide trade negotiations, is the right place to hide out", said Michael Antonelli, managing director, institutional sales trading at Robert W. Baird in Milwaukee.

Beijing has mounted campaigns against Japanese and South Korean companies in the past after diplomatic disputes. Specifically, Apple is said to fear that the Chinese government will cite national security concerns to impose bureaucratic delays on its supply chain and finished products, mirroring recent US actions that have penalized Chinese telecom companies Huawei and ZTE.

One day later, Beijing announced that it would meet Trump's tariffs, tit for tat: come July 6, China would apply a 25 percent duty to $34 billion of American exports, including soybeans, whiskey, orange juice, electric cars, salmon, and cigars.

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