On Monday, President Donald Trump announced he will impose 10 percent tariffs on $200 billion worth of Chinese imports, and those duties will rise to 25 percent at the end of the year.
The White House removed about 300 goods from a previously proposed list of affected products, including smart watches, some chemicals and other products such as bicycle helmets and high chairs.
“This is somewhat more severe than the market had anticipated, given recent rumors for an outright rate of 10 percent, and the tone of the statement was somewhat hawkish, including an assertion that ‘if China takes retaliatory action against our farmers or other industries, we will immediately pursue phase three, which is tariffs on approximately $267 billion of additional imports,” Deutsche Bank said in a note to its clients on Tuesday.
The U.S. has already levied tariffs on $50 billion worth of Chinese products. Beijing responded with measures targeting $50 billion on American goods, raising fears about damage to the U.S. farm industry.
Earlier this month, reports suggested that the U.S. was seeking to restart trade talks with China.
In a research note on Tuesday, Mark Haefele, global chief investment officer at UBS Wealth Management said the U.S.-China trade tensions will get worse before they better.
“An intensification of the U.S.-China trade spat is a near-term negative for risky assets, raising the specter of an economically damaging trade war in which high tariffs are imposed on most or all U.S.-China trade.”
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