Markets edgy on China US trade war fears

 

Stock markets have been hit by fears that US President Donald Trump's plan for tariffs on up to $60bn of Chinese products could trigger a trade war.

Japan's Nikkei share index fell 4.5% and in the US the Dow Jones sank 2.9%.
China responded to news of the planned tariffs by saying that while it did not want a trade war, it was "absolutely not afraid" of one.
Mr Trump's proposed tariffs are a response to allegations of intellectual property theft by China.
Beijing said it firmly opposed the new tariffs but China's ministry of commerce said it was "confident and capable of meeting any challenge".
"China will not sit idly by its own legitimate rights and interests. We are fully prepared to defend our legitimate interests," the ministry said.
But it said it hoped the US would not drag bilateral economic and trade relations into danger.
Fears of a trade war pushed Asian stock markets down sharply. China's Shanghai Composite Index closed down 3.4% while Hong Kong's Hang Seng index ended 2.5% lower.
However, the falls were less severe in Europe. Germany's Dax index dropped 1.7%, with Volkswagen and steel maker ThyssenKrupp among the biggest losers.
The UK's FTSE 100 share index was 0.8% lower.
On Thursday, US stocks had tumbled, with the S&P 500 index ending the day down 2.5%.

Image caption China is a huge consumer of pork and pork products

Earlier on Friday, China announced its own set of proposed tariffs worth $3bn. Beijing said these were in response to US tariffs on steel and aluminium imports announced by Mr Trump earlier this month.
The US tariffs on steel and aluminium imports come into effect this week.
China's commerce ministry said it was planning two steps of retaliatory action:

• a 15% tariff on 120 goods worth almost $1bn - including fresh fruit, nuts and wine
• a 25% tariff on eight goods worth nearly $2bn - including pork and aluminium scrap.

Why is the US taking tariff action?

The US imports billions more goods from China each year than it exports, creating a deficit of about $375bn last year - a figures which Mr Trump has railed against.
The president said on Thursday he had asked China to cut that deficit by $100bn "immediately".
Last August Mr Trump ordered an investigation into Chinese policies and his proposed tariffs reflect the outcome of that probe.