Asian markets fell in early trading Thursday as U.S.-China trade tensions rose, with President Donald Trump saying China “broke the deal” and China vowing to retaliate if the U.S. raises tariffs on Friday.
The U.S. is set to raise tariffs on $200 billion of Chinese goods to 25% from 10% on Friday. “You see the tariffs we’re doing? Because they broke the deal. They broke the deal,” Trump said at a rally in Florida on Wednesday night. “They can’t do that, so they’ll be paying.” Still, Trump predicted “it will all work out.”
Beijing will be forced to retaliate if the increases go ahead Friday as planned, China's Commerce Ministry said Thursday. It gave no details of possible penalties. “China deeply regrets that if the U.S. tariff measures are carried out, China will have to take necessary countermeasures,” said a Commerce Ministry statement.
The Wall Street Journal reported Wednesday night that China had been emboldened to take a harder line on trade talks after comments by Trump — specifically, his attacks on Fed Chairman Jerome Powell to cut interest rates, which China reportedly interpreted as a sign of weakness in the U.S. economy, and a signal that the U.S. was ready to compromise.
China’s Vice Premier Liu He will lead a delegation for ongoing trade talks in Washington on Thursday and Friday, and it is still believed to be possible that a final trade deal can be reached.
U.S. stocks gave up gains amid a sharp reversal near the end of the trading day, with the S&P 500 SPX, -0.16% and Nasdaq COMP, -0.26% closing lower for a third straight day and the Dow Jones Industrial Average DJIA, +0.01% staying in positive territory by just 2 points.
Japan’s Nikkei NIK, -1.24% fell 1.2%, and Hong Kong’s Hang Seng Index HSI, -1.64% slipped 1.6%. The Shanghai Composite SHCOMP, -1.24% declined 1.3% while the smaller-cap Shenzhen Composite 399106, -0.79% dipped 1%. South Korea’s Kospi SEU, -1.27% dropped 1.2%, and benchmark indexes in Taiwan Y9999, -1.31% , Singapore STI, -0.56% and Indonesia JAKIDX, -0.43% all sank. Australia’s S&P/ASX 200 XJO, +0.26% was one of the few gainers, up 0.3%.
Among individual stocks, Yahoo Japan
4689, +8.41%
soared after SoftBank Group
9984, -0.17%
said it will spend $4 billion to increase its stake in the company. Rakuten
4755, -6.00%
, Toyota
7203, -2.71%
and Sony
6758, -1.64%
fell in other Tokyo trading. In Hong Kong, food processor WH Group
0288, -6.42%
sank, along with tech firms AAC
2018, -4.22%
and Sunny Optical
2382, -4.47%
and China Life Insurance
2628, -3.58%
. Chip maker SK Hynix
000660, -3.86%
dropped in South Korea and Foxconn
2354, -2.22%
slid in Taiwan. Beach Energy
BPT, +0.51%
and Oil Search
OSH, +0.94%
rose in Australia.
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