West Texas Intermediate and international-benchmark Brent crude oil futures are under pressure early Wednesday after China said it will retaliate against the latest round of USA tariffs on Chinese imports.
The Trump administration has accused China of unfair trade practices, and President Donald Trump has long vowed to bring down the United States' trade deficit in goods with Beijing. Last week Trump threatened to jack up the tariff rate on the next $200 billion in Chinese imports it plans to target to 25 percent, from the previously stated 10 percent.
Still, disagreements between the two major economic powers run deeper than just the trade balance and tensions remain over market access, intellectual property, technology transfer and investment.
The Trump administration has deepened its trade war with China by announcing a new round of tariffs worth $US16 billion ($22 billion), a move the Chinese government has warned will trigger another round of retaliatory tariffs on U.S. exports.
After months of escalation, business communities in both countries are wondering when and how the trade confrontation will end.
A US-China trade war will reduce global output by 0.7 percent by 2020, with China's economy taking a 1.3 percent hit and US GDP dropping 1 percent, Oxford Economics said in a research note Tuesday, before the new list was released. But given the lack of talks and Trump's unclear goals, the trade war doesn't appear to be close to a resolution. China's exports to the USA fell by 2.5 percent to $41.5 billion month-on-month, while imports of U.S. goods plunged 1.5 percent to $13.4 billion, according to data from General Administration of Customs on Wednesday, as quoted by the media.
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The latest charge comes after the USA said it would implement another round of tariffs on $16 billion worth of Chinese goods.
May 19: After a meeting, the two countriesannounce the outline of a trade dealto avoid the tariffs.
June 15: Trump rolls out thefinal list of goods subject to new tariffs. He further added that his refinery had cancelled US crude imports and would switch to Middle East or West African supplies instead.
Negotiations broke off after the Trump administration imposed the tariffs on $34 billion in Chinese imports, a move the Chinese said would void any promises they'd made in negotiations.
China fired back with its own warning and said it would impose duties on $60 billion of USA goods.
Farmers and USA industries have been caught in the crossfire, and the Trump administration announced $12 billion in aid to help farmers hurt by duties on crops such as soybeans.