Wall St rout worsens as China hits back on trade

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USA -imposed tariffs will put pressure on China to make a deal because they will make Chinese products more expensive for Americans, and Chinese manufacturers will therefore sell less.

In addition to more tariffs, traders are concerned China, the largest foreign US creditor, may dump Treasuries to counter the Trump administration's hardening trade stance.

Trump later tweeted that "there will be nobody left in China to do business with". It also would turn the president's trade wars into a tangible reality for many Americans and their pocketbooks as he seeks re-election.

The higher tariffs from the US and China's response that it would take "necessary countermeasures" rattled investors Friday who had been hoping for a quick resolution to the dispute.

President Donald Trump has said he will meet with Chinese President Xi Jinping and Russian President Vladimir Putin at next month's G20 summit in Osaka, Japan.

The move comes after Beijing threatened "necessary countermeasures" for Trump's tariffs on Friday.

"There can be some retaliation, but it can't be very substantial", Trump told reporters Monday at the White House during a meeting with Hungarian Prime Minister Viktor Orban.

"Since we see a trade accord being reached in the not-too-distant future, we don't expect the market to endure more than a short-lived spate of indigestion", said Sam Stovall, chief investment strategist at CFRA. Treasuries jumped with the Japanese yen on demand for haven assets.

Apple shares were also hit by news that the US Supreme Court gave the go-ahead for a lawsuit by consumers accusing the iPhone maker of monopolizing the market for its software applications and forcing them to overpay.

Xi is resisting giving in on a list of trade compromises, even in the face of tariffs that threaten to add 25 per cent to the cost of goods shipped from China to the U.S.

They added that the effects of the tariffs had spilled over noticeably to the prices charged by USA producers competing with goods affected by the levies.

Wall Street's main indexes fell more than 2 per cent on Monday after Beijing announced plans to retaliate with higher tariffs on US goods, raising fears that another round of tit-for-tat measures could push the USA economy toward recession.

Rather going through a multilateral organization like the World Trade Organization, which would have allowed China to save face against its biggest rival, Trump has chosen potentially humiliating bilateral talks.

Washington wants Beijing to roll back plans for government-led creation of Chinese global competitors in robotics and other technology that its trading partners say violate its free-trade commitments.

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

The trade war between the world's two biggest economies is escalating, as China announced it will raise tariffs on $60 billion worth of US imports, in response to tariffs President Trump levied Friday. You had a great deal, nearly completed, & you backed out!' Trump wrote on Twitter.

"This just got messier and more expensive to the global economy and until we get break here, markets are going to be under pressure", said Art Hogan, chief market strategist at National Securities in NY. The Chinese list released Monday matched Trump's latest move in that it simply hikes the duties on a list of thousands of items that had already been targeted in an earlier phase of the trade war.

US tariffs a year ago triggered retaliation by China, which imposed 25% levies on $50 billion worth of USA products including soybeans, beef and pork and lower tariffs on a list of$60 billion in goods.