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Stocks steady after early plunge on trade war fears

Stocks steady after early plunge on trade war fears

Fears of a trade war between the world's two largest economies returned to haunt markets on Wednesday, sending USA stocks tumbling and sinking European and Asian equities. Trump, citing the USA trade deficit with China, appeared to argue that going head to head wouldn't be so bad. Investors are having to weigh the growing protectionist rhetoric between the USA and China against the chances of measures having a meaningful effect on the still-upbeat global growth picture. "Investors are hopeful that the final trade agreement will be much more lenient that what has been discussed in the last 12 hours".

The world's top importer of the oilseed will impose the tariffs on soybeans and 105 other USA products, state broadcaster CCTV said on Wednesday, an expected retaliation following Washington's aggressive trade actions. Both countries are targeting $500 billion in goods.

Specialists have actually guided China could relocate after United States technology firms like Apple succeeding- which could drive big American firms to raise their prices to make up.

The list of United States goods affected by Chinese tariffs reportedly includes vehicles, chemicals, some types of aircraft, soybean, corn, and other agricultural products.

Boeing, which delivered one-fourth of all its planes to China a year ago, fell as much as 5.7 percent early on and finished with a loss of $3.38, or 1 percent, at $327.44.

Beijing's proposed targets strike at the core of commercial relations between the two countries, and at some of the most politically sensitive goods in core Trump constituencies.

China's state-run media says the probe will "poison" the relationship between the two countries, while the Chinese government later slams the Trump administration's "unilateralism and protectionism". China is a crucial market for Boeing.

Despite footwear and apparel being fairly unscathed in any direct way by the new levies, experts contend that a looming trade war is likely to have wide-ranging affects across multiple industries and the American economy as a whole. Speaking to the BBC, Roberto Azevedo, the director-general of the World Trade Organisation (WTO), said the clashes between Washington and Beijing were "some of the most hard moments the WTO had faced in its 23 year history". The latter is a key ingredient for Trump's popularity with US voters.

On Wall Street, stocks sank as worry about trade tensions was compounded by heightened public scrutiny of tech companies in the United States and Europe. The trade is worth about $14 billion.

After a flat open, European markets fell sharply once the China tariffs were announced.

USA officials identified items that "benefit from Chinese industrial policies, including Made in China 2025".

Wall Street pros all agree that tariffs are bad for business and the economy.

Similarly, retailers such as Walmart, Macy's and Levi's also sent a letter to the White House expressing fears that new China tariffs would result in undue harm. "This is a classic lose-lose proposition, no one wins".

If there is a silver lining it is that much of the jawboning is viewed as part of the negotiation process, adds Schatz. "China's response is a surprise for some people", Julian Evans-Pritchard, Senior China Economist at Capital Economics, told Reuters noting that neither said had yet called for enforcement of the tariffs.

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