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China slaps retaliatory tariffs on $75bn of US goods

China is to hike tariffs on $75bn (£61bn) of US goods in the latest escalation of the trade war between the world's two largest economies.

Beijing says tariffs will rise by 5-10% on American goods and will begin to take effect in two batches of goods starting from September 1 and December 15.

China's reaction comes after President Donald Trump's plans to raise tariffs on an additional $300bn of Chinese imports on 1 September but postponed a portion of that to 15 December.

China's commerce ministry said the country will re-impose tariffs on US auto parts and for the first time will begin to target crude oil exported from the US.

It said in a statement: "China's decision to implement additional tariffs was forced by the U.S.'s unilateralism and protectionism."

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Stock markets reacted negatively to the news with the pan-European STOXX 600 index down by 0.3% and Germany's export-heavy DAX falling by 0.9% before pairing some losses. All three major US indexes, S&P500, Dow Jones and Nasdaq also fell by 0.5%.

News of the tariffs also sent Brent crude oil down by $1 to $58.30.

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Investors are looking for a confirmation from the chairman of the Federal Reserve Jerome Powell, who's set to speak at a meeting of central bankers shortly, on interest rate cuts next month against the backdrop of increasing risks for the economy from the ongoing tariff battle.

President Donald Trump in an apparent reference to the new tariffs called on the Federal Reserve to acknowledge the impact of the tariffs while making its decisions on interest rate levels.

Now the Fed can show their stuff!

— Donald J. Trump (@realDonaldTrump) August 23, 2019

Agathe Demarais, Global Forecasting Director at The Economist Intelligence Unit called Beijing's move "mild" and "proportionate" response.

She said: "The recent rise in nationalist, patriotic behaviour in China means that it would have been impossible for the Chinese government not to react to the latest US tariffs.

"The US-China trade war will continue to weigh on investors' sentiment in the coming months, putting a serious drag on global growth."

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