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China stocks tumbled on May 6 after President Donald Trump threatened new tariffs on Chinese goods, putting a trade deal in doubt.

President Trump announced on Twitter that the US would more than double tariffs on $200 billion of Chinese goods on May 3 and would introduce fresh tariffs.

Recent comments had suggested both sides were nearing a trade deal.

A Chinese delegation was due to travel to Washington this week for talks aimed at ending the trade war.

However, according to recent reports, China is now considering cancelling those talks, led by Vice-Premier Liu He, that were scheduled to resume on May 8.

Some reports said the Chinese were due to send a 100-person delegation to the negotiations.

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The Chinese government has yet to officially comment on President Trump’s tweets.

In China, Hong Kong’s Hang Seng index dropped 3.7%, while the Shanghai Composite plunged 5.3%.

US stock futures pointed to a lower open on Wall Street.

On May 3, President Trump tweeted: “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….”

“The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!” he continued.

After imposing duties on billions of dollars worth of one another’s goods last year, the US and China have been negotiating and in recent weeks, appeared to be close to striking a trade deal.

Last week US Treasury Secretary Steven Mnuchin described talks held in Beijing as “productive”.

So far, the US has imposed tariffs on $250 billion of Chinese goods, having accused China of unfair trade practices.

Beijing hit back with duties on $110 billion of American goods, blaming the US for starting “the largest trade war in economic history”.

President Trump’s latest move will raise duties on more than 5,000 products made by Chinese producers, ranging from chemicals to textiles and consumer goods.

He originally imposed a 10% tariff on these goods in September that was due to rise in January, but postponed this as negotiations advanced.

However, both US and international companies have said they are being harmed by the trade war.

Fears about a further escalation caused a slump in world stock markets towards the end of last year.

The IMF has warned a full-blown trade war would weaken the global economy.

According to new reports, the US is considering 25% tariffs on $200 billion of Chinese goods, much higher than the 10% it previously indicated it might impose.

The plan could be announced as early as August 1, but a higher tariff was not finalized, sources told media.

The measure would risk further escalating tensions between the US and China which are already mired in a trade war.

Last month, the US published a list of $200 billion worth of additional products to be taxed as early as September.

The list named more than 6,000 items including food products, minerals and consumer goods such as handbags.

The US opened fire in a trade war with 25% tariffs on $34 billion of Chinese goods, and China retaliated in kind.

Image source Pixabay

President Trump Threatens $100 Billion More in China Tariffs

China Imposes New Tariffs of Up to 25% on 128 US Imports

White House to Announce Sanctions against China over Theft and Transfer of Intellectual Property

US threats have escalated since, with President Donald Trump saying he is ready to slap tariffs on all $500 billion of Chinese imports.

The US accuses China of intellectual copyright theft and wants to bring down its lofty trade deficit with the world’s second largest economy.

However, the trade dispute is also seen as part of a broader tug of war between the two powerhouses for influence on the world stage.

On July 30, Secretary of State Mike Pompeo announced a plan to spend $113 million in Asia, a move that was widely seen as an attempt to counter China’s growing influence in the region.

According to Bloomberg, which was the first to report the news of the higher tariffs, US and Chinese officials were having private conversations as they sought to resume negotiations.

The US is also expected to soon announce tariffs on the remaining $16 billion of the $50 billion of Chinese goods the US originally planned to tax.

A public hearing on the second round of tariffs took place last week and the USTR has a July 31 deadline for post-hearing comments.