- Trade talks between the United States and China, scheduled to resume in Washington D.C. this week, may be cancelled following threats made by US President Donald Trump via Twitter on Sunday, according to a report from CNBC.
- One source told CNBC the threat to lift tariff rates is a message to Chinese Vice Premier Liu He to not come to the US with more “empty offers”.
- Risk assets across Asia have fallen sharply from escalating trade tensions. Only last week it was being reported that a trade deal may be struck by the end of this week.
Trade talks between the United States and China may be cancelled following threats made by US President Donald Trump via Twitter on Sunday.
According to two sources who spoke to CNBC, China’s trade delegation may back out of negotiations after Trump threatened to increase existing tariffs on hundreds of billions worth of Chinese goods entering the country — the first tranche potentially as soon as Friday.
One source told CNBC, Chinese Vice Premier Liu He will likely cancel the trip he’d planned for himself and a 100-person delegation ahead of the resumption of talks originally slated to begin this Friday.
A second source said Trump’s decision to lift the tariff rate on $200 billion of worth of Chinese goods from 10% to 25% from Friday was meant to send a message to Liu not to come to the US with more “empty offers”.
The CNBC report echoes similar sentiment expressed by sources who spoke the Wall Street Journal following the unexpected escalation in trade tensions sparked by Trump’s tweets.
Along with increasing existing tariff rates, Trump said an additional $US325 billion worth of goods from China will “shortly” attract tariffs of 25% as well.
Financial markets have not taken the unexpected escalation in trade tensions well. Widespread losses of more than 1% are being seen in Asian stocks, US stock futures and in Chinese commodity futures.
Currencies closely tied to the performance of the Chinese economy, such as the Australian and New Zealand dollars, have also fallen sharply while the Japanese yen, renowned for its safe haven status, has strengthened despite Japanese markets remaining closed for Golden Week holidays.
Benchmark 10-year government bonds are also reacting to safe haven buying, with yields falling from Friday’s closing levels.
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