The dollar rose near an 11-month high against the Chinese yuan and the Australian dollar tumbled after the U.S. said it would slap tariffs on an extra $200 billion of imports from China, sharply escalating tensions between the world's two biggest economies. China retaliated with duties on the same value of U.S. goods, including soybeans and cars.
The $200 billion move came in response to Beijing's retaliation for the first set of USA duties, which primarily targeted farmers in America's heartland, but the new tariffs won't be imposed until the end of a two-month period for public comment.
The list names more than 6,000 items including food products, minerals and consumer goods such as handbags. As the catalog of goods facing tariffs expands with each round, retailers have to adapt - sometimes by increasing prices for consumers - without an end to the conflict in sight, Shay said.
Washington made a decision to impose the extra tariffs after efforts to negotiate a solution to the trade dispute failed to reach an agreement, senior administration officials said on Tuesday.
China slammed the latest United States tariff threat as a "totally unacceptable" escalation of their trade battle and vowed Wednesday to protect its "core interests".
The administration will hold hearings on the proposed list late next month.
'Tonight's announcement appears reckless and is not a targeted approach, ' Senate Finance Chairman Orrin Hatch said.
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The latest round of proposed tariffs come a few days after the USA government unveiled procedures for companies to apply for exclusions from the first round of tariffs, which went into effect July 6. This has raised concerns that China could retaliate with non-tariff trade measures.
The US has suggested that it may ultimately impose tariffs on $500 billion worth of Chinese goods, or roughly the entire amount of US imports from China.
China's government has criticized the latest U.S. threat of a tariff hike as "totally unacceptable" and vowed to retaliate in their escalating trade war.
One of Canada's top economists says Canada is caught in the crossfire of a U.S. "There is no justification for such action", Mr Lighthizer said. "Right now, world trade is relatively chaotic".
China has said it will have to take what it called necessary counter-measures after the U.S announced plans for more tariffs on imports. "Imposing taxes on another $200 billion worth of products will raise the costs of everyday goods for American families".
"China has no option but to fight fire with fire". But Trump hasn't backed down, arguing that China's unfair trading practices are hurting American workers.
The Trump administration's latest shot in the trade war with China has sent shudders through global financial markets.