May 14, 2019 (China Knowledge) - China has vowed to respond to US tariff hikes with additional duties on USD 60 billion worth of American goods, wiping out more than USD 1 trillion of stock market value on Monday.
The Dow Jones Industrial Average and S&P 500 are now both down 2.4% while the Nasdaq Composite is down 3.4% for its largest daily percentage loss for the year.
While China’s tariff imposition was expected, the severity was not expected by investors as the Chinese government announced that it will impose 25% duties on USD 60 billion worth of US goods starting on June 1st.
In total, 2,493 US goods would be hit with a 25 per cent tariff; 1,078 items with a 20 per cent tariff; 974 items with a 10 per cent tariff and 595 items with a 5 per cent tariff according to the Chinese Ministry of Finance.
Goods hit by the highest rate include cooking oils, frozen vegetables, beverages as well as industrial minerals, chemicals, machinery parts and various consumer items.
The recent trade war escalation caught many off-guard as the two countries seemed increasingly likely to reach an agreement moving into last week. However, President Trump abruptly said in a tweet that he would increase tariffs, accusing China of going back on certain terms before following through on his threat.
The new tariffs will further disrupt current supply chains in both countries, forcing consumers to turn towards other options or be forced to pay higher prices.
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