U.S. President Donald Trump's Twitter account has caused another raucous in the financial world as the global markets took hit on Monday morning.
Trump Threatens to Hike Tariffs on Chinese Goods This Week
Trump jeopardized trade talks with China after he threatened them with higher tariffs via his Twitter account on Sunday.
"For 10 months, China has been paying Tariffs to the USA of 25% on 50 Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods. These payments are partially responsible for our great economic results. The 10% will go up to 25% on Friday. 325 Billions Dollars...." Trump tweeted, adding ....of additional goods sent to us by China remain untaxed, but will be shortly, at a rate of 25%. The Tariffs paid to the USA have had little impact on product cost, mostly borne by China. The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!"
Following these tweets, stocks in China closed down 5.5% as investors in Asia Pacific were caught off guard by Trump's tweets and threats, along with the Chinese government's threats to cancel trade talks.
China's Ministry of Foreign Affairs said on Monday that they are still preparing to send a delegation to the United States in order to negotiate with the Trump administration.
“As a matter of urgency, we still hope that the US and China will work together to move toward each other… to reach a mutually beneficial and win-win agreement,” Geng Shuang, a spokesman for the ministry, said at a regular news briefing Monday afternoon.
Although markets are closed in Japan and London on Monday, the Dax in Germany was down 1.6%. Futures trading indicated that Wall Street would fall 2% when trading opens later on Monday. Oil prices – a benchmark for global trade – also plunged and the Chinese yuan tumbled.
Traders feared that Trump’s threat to raise tariffs on $200bn of Chinese goods to 25% on Friday from 10% and then target a further $325bn of Chinese goods could destabilise global financial markets that had been boosted by what appeared to be encouraging progress in the negotiations.