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S&P 500 futures fall as U.S.-China trade fears escalate

Published 05/12/2019, 06:57 PM
Updated 05/12/2019, 07:00 PM
© Reuters. FILE PHOTO: A specialist trader works on the floor of the New York Stock Exchange

(Reuters) - Prospects for a drawn out trade war between the United States and China sent S&P 500 futures sharply lower as trading resumed on Sunday, after Washington demanded concrete changes to Chinese law and Beijing said it would not swallow any "bitter fruit" that harmed its interests.

White House economic adviser Larry Kudlow told the "Fox News Sunday" program that the United States needs to see China agree to "very strong" enforcement provisions for an eventual deal, and said the sticking point was Beijing's reluctance to put agreed changes into law. He vowed the tariffs would remain in place while negotiations continue.

S&P 500 e-mini futures were down 0.77%.

Latest comments

debt bubble? nothing?
In addition, China will need to keep cost low to induce Americans to buy, after all, they must fund their Belt snd Road and buy into global power using American dollar . They are hungry for dollar because other countries they try to bribe only take dollar, not Yuan
Chinese currency has devalued dramatically in the last few days from 6.7 to 6.88, so it’s clear that China intend to use currency manipulation to keep the cost of goods low for the importers. The Chinese people ( not the government) will pay the price of Tariff since currency devaluation will cause their inflation to soar and they will no longer afford foreign products( eg Baby formula, pork, tofu, meat etc)
it is not surprise that people believe china is paying this as trump believes so. the time will tell. US is totally wrong. both countries are hurt.
Keep the high tariffs for a long time. China needs to pay.
Why ask to be enlightened, then profess to know economic enlightenment? . Now, consider an importer, who before the tariff purchases 80 widgets for $80, now pays a 25% tariff. To answer your question, "How is China paying?", their "payment" results from the lost revenue. Additionally, the importer also "pay" as a result of the reduced quantity. Therefore, we theoretically presume they both share in the "payment" of the $20. Notice the drop in GDP from 80 to 64. In practice the imported may only buy $60 plus $15 tariff, or $75 gross product. This $5 difference is call Dead Weight Loss and is the basis for why we all agree taxes, tariffs, quotas, price floors and price ceilings are bad as they cause a decline in output.
Now, assume in this example, that US firms purchased the $60 of goods and our government collected $15 of tariff. And China retaliates in kind, but only collects $5 on $20 of goods. Who hurts more? Who wins when one of these nations depends on those exports vastly more than the importing nation? This should have been done 40 years ago, for we would not be in this predicament of technology theft and forced technology transfers!
Well said Jonas.
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