The yen rose across the board on Wednesday and Asian stocks were poised to come under pressure after the United States said it would impose tariffs on an extra 200 billion worth of Chinese imports, escalating the trade war.
Stocks began to be traded lower today as a trade war between the United States and the other major economies became a reality after President Donald Trump unveiled new tariffs on Chinese goods.
On Tuesday, the Office of the US Trade Representative proposed implementing 10 percent tariffs on a whopping 6,031 types of Chinese goods, including a range of food products and consumer electronics.
"Don't start a trade war and throw the soybean farmer under the bus because some big business lobby in Washington is whining about China's terms of business", he said. In late morning trading, all major European indices are also nursing losses of more than 1%.
"The Chinese side is shocked by the actions of the U.S.", a statement on the ministry's website declared. They warned tariffs on imports raise consumer prices and expose US farmers and manufacturers to retaliation. "This new round of proposed tariffs takes the fight onto yet another level from which it is going to be hard for either side to make a graceful retreat", said Eswar Prasad, former head of the International Monteary Fund's China division.
The $200 billion far exceeds the total value of goods China imports from the United States, which means Beijing may need to think of creative ways to respond to such US measures.
"The behavior of the USA is hurting China, hurting the world, and hurting itself", it said.
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These new suggested levies won't take effect until after a public comment period which runs through August.
The Trump administration said the new levies are a response to China's decision to retaliate against the first round of us tariffs.
"The Chinese government as always will have no choice but to take the necessary countermeasures", said China's ministry of commerce in a statement, without elaborating further.
'TARIFFS ARE TAXES' Senate Finance Committee Chairman Orrin Hatch, a senior member of Trump's Republican Party, said the announcement "appears reckless and is not a targeted approach".
"At the same time, the trade dispute can easily be blamed for a variety of ills".
The International Monetary Fund has warned that a full-blown trade war could undermine the broadest global upswing in years.
The country's Commerce Ministry earlier threatened "comprehensive measures", which were feared to include harassing American companies in China.
Members of Congress are increasingly questioning Trump's aggressive trade policies, warning that tariffs on imports raise prices for consumers and expose USA farmers and manufacturers to retaliation overseas.