U.S. stocks join global selloff on trade war worries

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"Both sides agreed to resolutely oppose unilateralism and protectionism and prevent such practices from impacting the world economy and even dragging the world economy into recession", said Chinese Vice Premier Liu He, responsible for shepherding the world's second largest economy.

President Xi Jinping's top economic adviser - said China and the European Union had agreed to defend the multilateral trading system, following talks on Monday in Beijing.

Karl Schamotta, director of market strategy at Cambridge Global Payments, said that even though the actions by the USA administration and retaliating countries "occupy a diminishingly small niche in the flow of global trade", they are having important psychological effects.

"It makes sense when the U.S.is isolating itself that its major trade partners will look to expand their economic interests elsewhere", Linda Lim, a professor of global business strategy at the Stephen Ross School of Business at the University of MI, told Newsweek.

China, also affected by United States steel tariffs, has denounced Trump's approach as "extreme pressure and blackmail", warning that it would "take strong, powerful countermeasures" if the president enacted his threats. "Note these costs to American consumers, workers and businesses occur whether or not there is foreign retaliation against American exports", she said.

But Treasury Secretary Steven Mnuchin said Monday on Twitter that the rules could be applied to "all countries that are trying to steal our technology".

China, the EU, Canada and Mexico have all responded with countermeasures to protectionist tariffs announced by Trump.

He then ordered his foreign trade chief to identify another US$200 billion worth of imports for a 10% levy, citing China's "unacceptable" move to raise its own tariffs.

The report comes after President Donald Trump's "America First" administration earlier this month announced new tariffs of 25% on US$50 billion (RM200 billion) in Chinese imports.

Trump escalated already burning trade tensions on Friday by threatening to hit all imports of cars assembled in the European Union (EU) with a 20 percent tariff. China has also announced a tit-for-tat scheme of tariffs targeting USA imports. For example, on Monday, Harley Davidson Inc.

While Harley is only one example, Lim believes the trade war is "likely to increase discrimination against US companies in China".

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