USA stocks slide as modest rally fades ahead of trade talks

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"We think that the direct effects of President Trump's threatened tariff hikes could reduce Chinese GDP by up to 0.4% and that the associated retaliation would have only a marginal direct impact on the U.S.", Jennifer McKeown, head of global economic service at Capital Economics, said in a note.

On May 8, President Donald Trump unleashed a fresh Twitter attack on China and the US Democrats.

The two countries are sparring over USA allegations that China steals technology and pressures American companies into handing over trade secrets, part of an aggressive campaign to turn Chinese companies into world leaders in robotics, electric cars and other advanced industries.

Chinese state media on Thursday published and aired reports quoting US-based organisations and individuals critical of Trump's decision to raise tariffs, though playing down the impact of higher USA tariffs on the Chinese economy.

But a Chinese delegation is still due in the USA for trade talks this week.

Tariffs will not apply to cargoes that have left China before the 12:01 a.m. Friday start time for the higher rates, U.S. Customs and Border Protection said on Thursday, giving a grace period to shippers with goods en route.

"We'll see but I am very happy with over US$100 Billion a year in Tariffs filling U.S. coffers.great for United States, not good for China!"

"The worst trade deal ever made is the WTO, because China was flatlining for many, many decades", said Trump, referring to the global World Trade Organization, which was formed during the Bill Clinton years, and welcomed China while George W. Bush was in the White House.

For 40 years, USA leaders have prioritized deepening economic ties between the two countries rather than confront China over its trade practices. Trump tweeted, threatening to raise the tariffs. Their sensitivity has its origins in the treaties that Western powers, including the United States, forced a feeble Qing Dynasty to accept following the First Opium War in the 1840s.

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Now, Mr Trump is saying this increase will go ahead on Friday because talks with Beijing are progressing "too slowly".

US officials are insisting that any deal be strictly enforced so that China lives up to its promises - something they say Beijing has repeatedly failed to do in the past. It has targeted U.S. goods ranging from chemicals, to vegetables and whiskey.

Many market pundits have pointed out that the US operates from a position of economic strength compared to China, especially given stronger-than-expected recent GDP and employment data.

The country's share markets have taken a battering due to the renewed trade tensions, however.

The Chinese yuan has also weakened to a four-month low, crossing the 6.80 per dollar level.

The S&P 500 index fell 4.63 parts, or 0.2%, to 2,879.42.

But imports from the United States declined by even more - nearly 26%, widening China's trade surplus with the United States.

Each side has hinted that the other has more to lose.

Boeing, the largest U.S. exporter to China, declined 4% and construction equipment giant Caterpillar fell 2.3%.

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