Renewed U.S.-China trade spat boosts safety demand for yen

"China has been taking out $500 billion a year out of our country and rebuilding China".

In total, Trump has now threatened up to $450 billion U.S. in Chinese imports with tariffs, including another $200 billion USA in Chinese goods if Beijing retaliates after the step Trump announced on Monday.

"If the US loses its senses and publishes such a list, China will have to take comprehensive quantitative and qualitative measures", according to a statement from the Ministry of Commerce. China denies such theft and accuses Washington of "deviating from the consensus reached by both parties". The fact that America imports more from China will make it harder for Beijing to match Trump's attacks, according to Derek Scissors, a resident scholar at the conservative American Enterprise Institute in Washington who focuses on China.

U.S. Secretary of State Mike Pompeo spoke to a business group in Detroit, Michigan on Monday.

China's stock market dropped 2.7 percent, while Japan's Nikkei ended down by 1.7 percent. In Europe, Germany's Dax index and France's Cac 40 were both about 1.5% lower in afternoon trading.

He said China's latest action clearly indicated its determination to keep the United States at a permanent and unfair disadvantage, which is reflected in the massive USD 376 billion trade imbalance in goods.

"Risking a trade war with more tariffs will only invite more retaliation that will cause significant harm to the USA economy", said the group, urging the administration instead to "work with our allies and place coordinated pressure on China to end their harmful trade and investment practices".

The decision came in response to U.S. President Donald Trump saying he was pushing ahead with hefty tariffs on $50 billion of Chinese imports.

Trump announced on Monday evening that he'd asked U.S. Trade Representative Robert Lighthizer to draw up a list of $200 billion in Chinese imports that the U.S. could impose a 10 percent tariff on.

Shares of Boeing (BA.N), which has acted as a proxy for trade war tensions with China as it is the single largest US exporter to the country, fell 2.1 percent premarket. And although the White House shielded ordinary consumers from the impact of its initial round of tariffs - by concentrating the duties on advanced industrial inputs and technology - there is no way to tax $250 billion worth of Chinese products without driving up retail prices for American shoppers. Those penalties are scheduled to take effect next month and will likely be followed by Chinese countermeasures.

"There is going to be a sales lull that will keep these barrels trapped and the widening of the spread that we see will persist and get worse before it gets better", said John Kilduff, partner at Again Capital LLC in NY.

For months, the US and China have traded tit-for-tat trade threats, and they have escalated again in just the last few days. That response prompted President Trump to threaten an additional $200 billion of tariffs.

Despite investors' jitters over the rising trade rhetoric, Mr. Navarro said the president's action will be "ultimately bullish" for corporate America and US workers. Which is to say: Beijing is using violations of worldwide trade rules in a bid to reshape the global economy in a manner that will weaken the West relative to China.

Meanwhile, Canadian officials have stressed the two countries' extensive trading relationship and pointed out that Canada is the top export destination for 35 USA states and that 9 million jobs in the United States depend on trade with its northern neighbor.

Adding fuel to the intensifying trade dispute was the passage of a defense bill that set up a potential battle with the White House over whether ZTE Corp 0763.HK , 000063.SZ can resume business with its US suppliers. "This is a trade dispute - nothing more, nothing less".

That deadline has been extended several times as Canada and Mexico struggle to accommodate far-reaching USA demands for change, such as a sunset clause that would allow one nation to pull out after five years.