The White House administration’s most recent volley in its trade war with Beijing sent shudders across the worldwide financial markets on Wednesday.
The United States government announced it was preparing to put new 10% tariffs on more than $200 billion worth of imported Chinese goods that include fruits, vegetables, baseball gloves and handbags.
China’s Shanghai Composite was down 1.8% while the Hang Seng in Hong Kong fell 1.3% on Wednesday. China’s yuan fell against the dollar by 0.5%.
Other markets suffered as the Nikkei in Japan fell by over 1.2% and most European indexes were down over 1% in early morning trading, while the Dow futures pointed toward a 1% drop at the open.
The stock market in China has been one of the worst performing worldwide for 2018, as it has been dragged down by fears the country’s economy will suffer a slowdown and that the trade battle with the U.S. will cause major economic problems.
Amongst the stocks in China caught being hit by this on Wednesday were the companies that have strong ties to the market in the U.S.
Shares in Qingdao Haier the maker of household appliances plunged by over 2%. The new list of tariffs in the U.S. targeted products such as refrigerators and air-conditioners.
The announcement by the U.S. comes just a few days after China and the U.S. imposed 25% tariffs on one another’s exports worth $34 billion.
A market strategist based in Singapore said that investors were bracing for more retaliation by Beijing that will bring about even more tariffs on U.S. products and other ways of showing the displeasure it has with Washington, which could include making it hard for U.S. companies operating inside the second largest economy in the world.
Commerce Ministry in China said on Wednesday that the White House’s announcement of new tariffs was unacceptable. The ministry warned that China would respond using necessary countermeasures but details were not provided.
One currency strategist in Asia said that the lack of planned trade negotiations that would help to defuse tensions between the governments of both countries was adding to anxieties for investors.
The yuan fell sharply versus the dollar in June as trade war fears escalated. The central bank of China spoke late week saying close attention is being paid to the recent currency fluctuations and it will look to stabilization the yuan.