US stocks tumble as China hikes tariffs

Beijing's top trade negotiator Liu He warned of retaliatory measures after the United States imposed further tariffs on imports from China

Kudlow's comment is in direct contrast with US President Donald Trump's claims.

The latest trade talks ended Friday with no word of progress after Washington accused Beijing of trying to backtrack on earlier commitments.

Trump has since defended the USA tariff hike and said he was in "absolutely no rush" to finalise a deal.

The trade standoff is rattling global markets as China remains defiant in the face of warnings from Trump not to strike back after his imposition of higher tariffs Friday. 'This has been proven recently when only 4 points were paid by the US, 21 points by China because China subsidizes product to such a large degree'.

The tariff escalation has rattled global markets, even as U.S. President Donald Trump said he would meet with Chinese President Xi Jinping next month.

The "points" are a reference to the percentage increase in tariffs on Chinese goods, from 4 per cent to 25 per cent, compared to a more modest tariff hike the Chinese have recently enforced in the other direction.

Shares in Asia extended losses on Tuesday following sharp falls on Wall Street overnight, the yen strengthened and US Treasury yields ticked lower as the trade war between China and the United States escalated. "Therefore, China should not retaliate-will only get worse!"

USA equities hit record highs just two weeks ago on hopes of a trade deal and a positive first-quarter earnings season.

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With the accumulation of tariffs, and the passing of time, the need for greater concessions from China to justify these costs becomes more pressing - and becomes less likely to be met.

President Trump "badly needs" to score a win with his "bold" China strategy so he can head into the 2020 election at his strongest, according to Fox News Senior Political Analyst Brit Hume.

China on Monday announced tariff increases on $60 billion of US imports, particularly farm products like soybeans.

The world's two largest economies had seemed to be on track to resolve the ongoing trade dispute that has raised prices for consumers and pinched corporate profit margins.

The latest tensions "raise fresh doubts about this recovery path", said Morgan Stanley economists Robin Xing, Jenny Zheng and Zhipeng Cai in a report. This would likely curb USA economic growth by half a percentage point in 2020 and cost 300,000 jobs, according to Oxford Economics. That would push annual growth below six per cent, raising the risk of politically unsafe job losses. Trump said on Monday his administration was planning to provide about $15 billion to help farmers whose products might be targeted.

Mr Kudlow said he thought the tariffs would also have an impact on China's economy, as the higher cost would reduce United States demand for Chinese goods.

"Investors finally woke up to the fact this may ultimately go on a lot longer and be a lot nastier than people had thought", Mr. Naroff said.

The abruptness of Trump's announcement on May 5, just days before the last round of talks, about raising tariffs to 25% made companies see doing business in China as more uncertain, said Jake Parker, vice president of the U.S. Economists say more might follow to reduce the risk of American tariff hikes. As it turns out, approximately 1,800 jobs were created in the U.S.as a result of this policy, which was exactly its intended effect.

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