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China Signals No Trade Thaw, and Markets Resume Their Fall


BEIJING — China on Thursday redoubled its vow to retaliate against President Trump’s threat of more tariffs even after he said he would postpone some of them, casting a pall on markets trying to recover from a bad day on Wall Street.

The Chinese government will “have to take the necessary countermeasures” should Mr. Trump carry out his threat to impose 10 percent tariffs on an additional $300 billion worth of Chinese-made goods from Sept. 1, according to an official statement. The statement — attributed to an unidentified official from the Customs Tariff Commission of the State Council, China’s cabinet — did not specify what those countermeasures would be.

The statement also said that Mr. Trump’s threat violated the consensus he had reached with the Chinese president, Xi Jinping, at a meeting in Osaka, Japan, in June. That meeting led to a resumption of trade talks, though the two sides have remained far apart on major issues.

The statement, issued late on Thursday in China, reiterated Beijing’s previous stance. But it came days after Mr. Trump said he would hold off on some of the tariffs, a move that cheered markets hoping that the two sides could be making progress toward a deal.

The Chinese statement soured investors who, until that moment, had been sending global markets moderately higher. European markets were lower midday Thursday, having opened mostly higher. Futures markets indicated that Wall Street would open lower. Asian markets, which closed before the statement was issued, ended mixed.

The threat of additional tariffs has added to fears about the global economic outlook and pushed markets lower around the world. Those fears were evident on Wednesday, after investors worried about global growth gave Wall Street one of its worst days this year. The S&P 500 index fell 2.93 percent.

Investors have other issues on their mind as well. In the United States, bond markets have begun to hint that a recession there could come soon. Markets were also hit on Wednesday by glum economic news from Germany and from China.

Complicating that outlook is the situation in Hong Kong, a semiautonomous Chinese territory. Hong Kong residents have been protesting China’s growing involvement in daily life. In recent days, violence has led Chinese state media to make thinly veiled threats about military intervention.

“There were a handful of catalysts adding to the markets’ roller-coaster ride, including continuing civil unrest in Hong Kong and escalating fears that trade relations with China are becoming even more derailed,” said Tom Stringfellow, chief investment officer at Frost Investment Advisors, in an emailed note, referring to Wednesday’s slump.

Late on Wednesday, Mr. Trump suggested that the fate of the trade war and Beijing’s response to the Hong Kong protests could be linked. “Of course China wants to make a deal,” he wrote on Twitter. “Let them work humanely with Hong Kong first!”

The tenor from many economists has grown more pessimistic as the trade war has escalated. Last week, global currency markets were shaken after Chinese officials raised the specter of a currency war with the United States in response to a new tariff threat from the Trump administration.

“Markets are reacting on the fear that the additional threats of more tariffs by the Trump administration will result in a slower-growing global economy,” said Steve Cochrane, the chief Asia Pacific economist at Moody’s. “The risk of recession in the U.S. is not overstated,” he said.

Last week, Goldman Sachs flagged concerns about the United States economy after Mr. Trump threatened to put the 10 percent tariffs on additional Chinese goods. Goldman said the threat added to fears of a recession.

Earlier this week, Trump administration officials clarified which tariffs they would increase on Sept. 1, leaving certain Chinese goods off the list until December, like laptops, cellphones and toys.

That move did little to ease the concerns of some experts.

“We are in uncharted territory with few historical precedents to guide us,” said Shaun Roache, chief economist for Asia Pacific at S&P Global. “The latest temporary reprieve on tariffs does little to ease this uncertainty.”

Asian markets ended mixed, as some clawed back losses from earlier in the day.

In Japan, the Nikkei 225 index fell 1.2. The S&P/ASX 200 index in Australia, one of the first markets to begin trading on Thursday, fell 2.85 percent.

But Hong Kong’s Hang Seng Index ended up 0.8 percent. In China, the Shanghai Composite Index rose 0.3 percent. In South Korea, the Kospi index rose 0.7 percent.

European markets soured after China’s statement was released. London’s FTSE 100 index was down 1 percent in late morning trading. In France, the CAC 40 index was down 0.8 percent. Germany’s DAX index, which had opened flat, was down 0.9 percent.


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