Bloomberg News reported in the afternoon that the Trump administration will put tariffs on the rest of the country's imports from China if Presidents Donald Trump and Xi Jinping don't make substantial progress in easing the trade dispute next month.
Trump also said he believed "a great deal" on trade can be agreed with China, but warned about new tariffs if the deal is not struck. They would be on top of the Dollars 250 billion already imposed.
While the proposed new tariffs have yet to be confirmed, the Bloomberg report is in line with a Wall Street Journal report last week that the United States was refusing to "resume trade negotiations with China until Beijing comes up with a concrete proposal to address Washington's complaints about forced technology transfers and other issues".
Among industrials, Boeing sank 6.6% to $335.59.
Trump said in the interview he would like to make a deal now, but that China was not ready.
NAB's Mark Todd said he doesn't see China or United States backing down.
Hong Kong's Hang Seng Index fell 0.9 percent Tuesday, while the Shanghai Composite Index rose 1 percent. Facebook stock was also down 2 percent, Amazon fell 6 percent, Netflix dropped 5 percent and Google's parent company Alphabet fell 4.5 percent.
Panic cooled somewhat in the last 15 minutes of trading as the Dow pared losses to end the day down 245.39 points, or 1 percent, at 24,442.92 while the S&P 500 shed 0.7 percent. Figures from the previous year, the most recent data available, showed 44 per cent of Chinese respondents held unfavourable views of the US. The dollar added to a 16-month high and Treasuries slipped as US stocks climbed.
"More than 70 percent of American firms operating in the South of China, consider the suspension of further investment in the country and move some or all of their production facilities to other countries, because trade war hits profits", reports Reuters. The effects could be especially severe for technology companies, which make many of their products in China, and for industrials. Trade-sensitive industrial shares rose almost 1.2 per cent in mid-morning trading.
Brazil's Bovespa rose in morning trading after far-right politician Jair Bolsonaro was elected president, but it later ended down 2.2%. Italy's FTSE MIB index rose 1.9% after Standard & Poor's did not downgrade its credit rating.
Brent crude futures fell $1.34 to $76.00 a barrel, a 1.7-per-cent drop. Most of those imports are now being charged a 10 percent tariff, which is set to increase to 25 percent at the end of the year. Brent crude, used to price global oils, lost 19 cents to $77.18 per barrel.
Gold fell 0.1 percent to $1,231.51 an ounce, the biggest fall in a week.
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