Stocks tumble as investors fear escalating USA and China trade conflict

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Several U.S. chief executives attending a high-profile forum in Beijing on Saturday, including BlackRock Inc's Larry Fink and Apple Inc's Tim Cook, urged restraint.

He adds, "It doesn't mean a war with China".

In announcing the planned tariffs, the commerce ministry said China would also "take legal action within the framework of the World Trade Organisation".

In applying the steel and aluminum tariffs, Trump's main concern is that China has for years overproduced steel and aluminum, depressing prices globally and causing job losses in other countries, like the US but also in Europe.

Firing off a warning shot, China on Friday declared plans to levy additional duties on up to $3 billion of USA imports in response to US tariffs on steel and aluminum, imposed after a separate USA probe. The USDA projected last month that US farm income is expected to decline almost 7% this year.

"Xi's done an excellent job walking the thin line between Trump's aggressive rhetoric and protecting his own strong nationalist image", said Cliff Kupchan, the Washington-based chairman of Eurasia Group, a consultancy. "We know what the Chinese bottom line is".

Now the new China 2025 policy calls for dominance in 10 high-tech industries including aviation, robotics and energy-efficient vehicles.

Lighthizer told colleagues their careers will be judged by how they deal with China-related challenges. In order to protect its interests, China intends to suspend substantive equal concessions and other obligations to the U.S.in accordance with relevant WTO rules and China's trade laws.

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"I don't think local governments in the United States and President Trump hope to see US workers losing their jobs", Sun Yongcai, general manager at Chinese railway firm CRRS Corp, which has two USA production plants, said at the forum.

"If these tariffs stick and there's no help for us as a downstream business with imported or low-priced kegs coming in, we'll be in deep trouble", American Keg CEO Paul Czachor told FOX Business' Maria Bartiromo during an interview on Friday.

China's goods exports to the United States rose by $43 billion in 2017 alone. Agricultural communities across the USA fear escalating trade tensions will increase prices of US goods overseas and harm their business.

Lighthizer said the goal of these controversial tariffs, ultimately, is to change the market and press the Chinese to reduce their production.

Stocks were sent sputtering by the prospective clash of economic giants, trade wonks muttered that the American salvo lacked a planned exit strategy and China vowed retaliation over the threatened 25 per cent USA duty on high-tech products: "China would fight to the end ... with all necessary measures".

This is not the first time the USA and China have battled over intellectual property protection.

"The total import and export of petrochemicals of China stood at 583.4 billion USA dollars in 2017, increased by 22.1 percent". "That announcement is nearly certain to provoke China into retaliating against US agriculture". After a public comment period, the final list, will be made public.

A tit-for-tat escalation of trade retaliation, coupled with Trump's desire to "look tough on China" will make it harder for the two sides to settle their differences, said Eswar Prasad, a professor of trade policy at Cornell University and a former head of the International Monetary Fund's China department. However, the mechanism has improved radically over the last few years and has managed to resolve issues in a more reasonable time frame, he added.

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