US-China Trade Dispute Worries Investors

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19 June, 2018

The latest United States and China trade dispute has worried investors and affected stock prices and the indexes that measure them.

Among Asian countries, China's Shanghai stock index fell

nearly 3.8 percent while Hong Kong's Hang Seng index lost nearly 2.8 percent.

On Tuesday, the U.S. Dow Jones Industrial Average opened more than one percent lower.

U.S. President Donald Trump said Monday that he had asked the U.S. trade representative to identify Chinese products that would face a new 10 percent tariff. The president said the new tariffs would affect $200 billion dollars in goods.

The president said the tariffs were in reaction to China's decision to place similar import taxes on $50 billion in U.S. goods. The move was a response to Trump's decision to add a 25 percent tariff on $50 billion worth of Chinese goods last week.

China's commerce ministry strongly criticized the latest move saying it does not follow "the consensus reached by both sides" during negotiations. The two sides have been involved in negotiations with China offering to buy $70 billion dollars in U.S. goods.

Trump has blamed the trade imbalance between the two countries for the loss of American jobs. China's trade surplus with the U.S. last year was about $375 billion. Trump said he hopes to cut the trade deficit with the increased tariffs.

The treatment of intellectual property remains a disputed issue between negotiators from both sides.

U.S. Secretary of State Mike Pompeo spoke to a business group in Detroit, Michigan on Monday. He criticized China's trade policies as "predatory." He said China was taking intellectual property at a level never before seen.

Pompeo said he raised the issue with Chinese President Xi Jinping. He said he told Xi that the current system is "not fair competition."

Trump's former economic adviser, Gary Cohn, has warned that a continuing trade dispute could result in higher inflation and personal debt.

However, business expert Derek Scissors of the American Enterprise Institute says the U.S. could gain from the dispute. He notes that the U.S. imports more from China than China imports from the U.S.

I'm Mario Ritter.

Mario Ritter adapted this story for VOA Learning English based on VOA, Reuters and AP news reports. Hai Do was the editor.


Words in This Story

tariff - n. taxes on imported or exported goods or services

consensus –n. agreement by all involved

intellectual property –n. property such as inventions, research and media that carry rights for the owner to use, sell or gain from the property

predatory –adj. wrongly or harmfully using others

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