Gold steadies as Trump's tariff threat supports dollar

The move marked a major escalation in trade tensions between the world's two largest economies

"The 10% will go up to 25% on Friday", Trump tweeted on Sunday.

Earlier, a Chinese official in Beijing said that China's top trade envoy is preparing to travel to Washington for crucial talks, despite Trump threatening to impose more punishing taxes on Dollars 200 billion worth of Chinese products, citing slow progress in negotiations.

The US treasury secretary, Steven Mnuchin, and trade representative, Robert Lighthizer, held talks with China's vice-premier, Liu He, in Beijing last week.

He said that $325 billion of other, Chinese goods remain untaxed now, but they won't stay that way for long.

"Although Trump's strategy is risky, because the Chinese could refuse to negotiate at gunpoint and decide to walk out on the trade talks, both sides have invested too much political capital in the negotiations to let this happen", said Raoul Leering, head of worldwide trade analysis at ING.

China imposes tariffs on US$3 billion worth of 128 USA products, in response to America's earlier levies on steel and aluminium. So, for example, Costco would pay the tax on TVs imported for China, explains Howard Gleckman at the Tax Policy Center.

The US announces it will impose tariffs of 25 per cent on US$50 billion (S$68.2 billion) of Chinese imports, particularly electronics, in the first round of tariffs specifically targeted at China. While "great progress" has been made in the talks, structural and enforcement issues remained, he said.

Talks between the US and China to resolve their year-long trade standoff appeared to be on life-support Monday, with Beijing struggling to respond to a pair of tweets by President Donald Trump that threaten an escalation of tariffs by the end of the week. In the opening minutes of trading in NY, the three major US stock indices dropped significantly.

"President Trump set the tone for the week, expressing dissatisfaction at the pace of China trade negotiations amid Beijing's attempt to renegotiate", Rodrigo Catril, a senior foreign-exchange strategist at National Australia Bank, wrote in a morning note.

World markets suffered even sharper losses as investors express concern about how tariffs and trade uncertainty will impact China's already-slowing economy.

The dollar, which was the preferred safe-haven from U.S.

Goldman Sachs doubled the odds of auto tariffs are coming this year to 20, and lessened the odds it gives to a free trade agreement between the U.S., Canada and Mexico. "Let's see when trade talks can resume", Hu Xijin, editor-in-chief of the tabloid the Global Times, tweeted. Meanwhile, a media blackout on Trump's threat left investors baffled as stocks and the yuan tumbled on rumors that the trade war is now back on.

A February study published by the Trade Partnership estimated that slapping 25 percent tariffs on all remaining non-tariff Chinese imports-which is exactly what Trump threatened to do on Sunday-would cost more than 2.1 million American jobs, reduce the size of the USA economy by more than 1 percent, and cost the average family of four about $2,200.

The motorcycle manufacturer said European Union and China tariff-related costs were $23.7 million in 2018 and are expected to range between $100 million and $120 million in 2019.

"Our biggest competitor in my view is probably China in terms of who's going to win the 21st century", Khanna said.

Gold had earlier hit a near one-week peak of $1,285.51 an ounce as Trump's comments dented global shares and oil prices.

Michael Hirson, Asia director at Eurasia Group, said Mr Trump's "unexpected resumption of tariff escalation comes just as trade talks were headed towards a final stage".

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