USA hikes tariffs leaving high uncertainty in place - Danske Bank

Trump and China's President Xi Jinping make joint statements at the Great Hall of the People in Beijing

China's Commerce Ministry confirmed the latest United States tariff increase on its website.

Minutes after the USA increased punitive duties on $200 billion in imports from China from 10 to 25 percent, the Chinese commerce ministry said it "deeply regrets" the move and repeated its pledge to take "necessary countermeasures", without elaborating. From the early days of his Administration, Trump has sought to boost Wall Street and take credit for any gains in the Dow.

The United States and China have been locked in a trade war for the past year with a new round of USA tariffs scheduled to go into effect Friday. The spokesman, Gao Feng, said later that Beijing has the "determination and ability to defend its own interests".

Global equities tumbled toward five-week lows as the escalating trade fight fed worries about the world economy and investors sought the safety of bonds and the Japanese yen, which hit a six-week high against the USA dollar.

But on Sunday Mr Trump said on Twitter that the USA would hike tariffs on $US200b worth of Chinese goods this week and could introduce fresh tariffs. Hong Kong's main benchmark skidded 2.4 percent and the Shanghai Composite Index lost 1.5 percent.

Asian stocks were down overnight, with Japan's Nikkei 225 retreating almost 1 percent and Hong Kong's Hang Seng down 2.4 percent. Through late last week, Trump administration officials were suggesting that negotiators were making steady progress.

China appealed to the United States to help salvage the deal earlier on Thursday.

With no action taken by the Trump administration to reverse the increase the duty rate to 25 percent from the previous 10% by 0401 GMT, investors anxious about further escalation in the trade war that has dogged the global economy for more than a year. The 10% will go up to 25% on Friday.

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The U.S. military said the drill involved a short-range ballistic missile, which was the first in almost 1.5 year. "It actually makes it more hard for the USA and South Korea to postpone military exercises", she says.

Then, after briefing President Trump on the negotiations, US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin dined with the leader of the Chinese delegation, Vice Premier Liu He.

Trump told reporters that he happens "to think tariffs for our country are very powerful", in line with a view he has been expressing that such increased punitive taxes would be good for America's economy.

Liu He, China's vice premier and top trade negotiator, led the China team. The U.S. experienced almost 3% GDP growth past year while the Dow Jones Industrial Average, for instance, has expanded more than 30% since Trump took office. Regulators have targeted operations of American companies in China by slowing customs clearance for their goods and stepping up regulatory scrutiny that can hamper operations. They deny their plans violate Beijing's trade commitments but have offered to change details that provoke the most foreign opposition.

"China is not afraid of conflict", said the Global Times, a newspaper published by the ruling Communist Party's People's Daily that is known for its nationalist tone. It said Beijing has measures in place to "minimize losses" for its companies.

"Now as US-China trade tensions seem to be escalating again, it is the bond and the equity market doing the adjustment work while the safe haven bid for the Dollars has remained muted". In addition, if China dumps Treasuries, that could cause prices to plummet, driving yields higher and devaluing whatever USA debt the country is still holding. Industries including electronics that the Communist Party is promoting as China's economic future have suffered declines of up to 40% in sales to the United States.

"He just wrote me a attractive letter, I just received it, and I'll probably speak to him by phone but look we have two great alternatives, our country is doing fantastically well", Trump said.

A man looks at digital accessories in Beijing, May 9, 2019. In the 12 months through April, the PPI increased 2.2 percent, matching March's rise, the department said in another report. Goods exports increased 1.4 percent to $141.7 billion.

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