US stocks take more losses as investors fear trade war

Analysis: In a US-China trade war, Trump supporters likely get hurt the most

Geoffrey Yu, the head of the United Kingdom investment office of UBS Wealth Management, said: "We see China's retaliatory tariffs as relatively measured".

Arthur Kroeber, managing director of Gavekal Dragonomics, said Beijing was sending a "carefully calibrated" message that it will stand up to Trump, while trying not to escalate the spat into a confrontation that could seriously threaten the global trading system.

China vowed on Thursday that it would fight a potential trade war "until the end". That would be a huge blow to US farmers, as American exports to the Asian country are worth about $14 billion annually. Fear of a trade war shocked the world stock markets, which damaged European markets and led to falls in Asian stock markets.

The Foreign Ministry on Friday said that it did not want a trade war with the United States and that any such development would harm both countries, but vowed to retaliate on hundreds of U.S. exports.

If a trade war does erupt, both sides are likely to share the blame.

He says nuclear option would be to sell a "couple hundred billion" in US Treasuries, which would tank markets and raise US interest rates.

Global stocks have plummeted as fears rise that the confrontation could provoke a damaging trade war.

While talks are ongoing between the two countries to find a reciprocal trade agreement, China responded to Trump's tariffs with its own list of 128 USA products that could be subject to import tariffs in China.

"I'm anxious that it would affect the national economy", said S. E. Kim, an employee at a construction company in Seoul. With almost 1.4 billion people, China is a big market for the largest US businesses.

But China was not spared, with the US President pointing to his country's $504bn deficit with the country and confirming that there would be additional sanctions across a wide range of goods and services from software to fake Ralph Lauren polo shirts.

While Beijing has yet to target US soybeans, speculation mounted that the oilseed could be next. He said China would target states and industries that are important to Trump, such as autos, planes, IT and semiconductors, wheat, corn and soybeans. In Beijing, China on Friday warned America not to be "penny wise and pound foolish", as it unveiled plans to impose higher tariffs on 128 USA products worth about $3 billion. Chinese President Xi Jinping sent two high-level envoys to Washington last month, but neither managed to resolve the situation, he pointed out.

'We talk about everything in principle with a friendly country that respects WTO rules. "They won't clip the wings of China Inc", he said. "Negotiations are much better for everyone". To bolster its decision, the White House released a report on Thursday mapping a pattern of predatory behavior by the Chinese, such as forcing American companies to transfer technology and trade secrets, and "systematic" data theft through hacking of American computer systems.

"Conflict is unavoidable", said Hui Shousheng, a researcher at the Tsinghua National Strategy Institute in Beijing.

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