China shares and yuan weakened after U.S. threatens more tariffs

Vastavam web: China’s shares tumbled and the yuan weakened on Wednesday after the United States said it would impose tariffs on an additional $200 billion of Chinese imports in a sharp escalation of the trade conflict. Washington’s latest move, which comes just days after both countries imposed tit-for-tat tariffs on $34 billion of each other’s goods, ups the ante in a heated trade dispute that has rattled global financial markets.

Investors are particularly worried the trade conflict could harm an already slowing Chinese economy in a blow to global investment and growth. “With China importing only USD162bn from the U.S. the last twelve months ending May, markets will be anxiously awaiting China’s response,” FX strategists at DBS Group Research wrote in a note.

The threat of additional tariffs on $200 billion worth of goods “would mean that around half of Chinese exports of goods to the U.S. would face significant U.S. punitive tariff measures,” Rajiv Biswas, Asia Pacific Chief Economist at IHS Markit, said in a note. “China’s export sector will therefore suffer a significant deterioration in export competitiveness to the US compared to other emerging markets’ manufacturing exporters. ”The onshore yuan CNY=CFXS opened at 6.6694 per dollar and was changing hands at 6.6660 as of 0226 GMT.

The offshore yuan CNH=D3 was at 6.6726 per dollar at 0225 GMT after hitting a low of 6.6918, down nearly 0.5 percent on day at one point in early Asian trade. “Investors confidence was rocked after the U.S. administrations latest trade salvo which reminded us that not all is quiet on the western trade war front after the Trump administration released a list of 10 percent tariffs on $200 billion in Chinese goods,” Stephen Innes, head of trading for Asia Pacific at OANDA wrote in a note.