WASHINGTON: President Donald Trump on Wednesday (Apr 4) said the United States is not in a trade war with China, as both sides shake global markets with tit-for-tat actions.
"We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the U.S.," Trump said in a morning tweet.
"Now we have a Trade Deficit of $500 Billion a year, with Intellectual Property Theft of another $300 Billion. We cannot let this continue!"
The comments come after China unveiled plans to slap major US exports worth US$50 billion - including soybeans, cars and small airplanes - with retaliatory tariffs.
The Chinese action was, in turn, in response to the Trump administration's own US$50-billion list of Chinese products that face US tariffs over Beijing's alleged theft of intellectual property and technology.
The last month has seen the mercurial Republican leader rattle markets in announcing punishing new tariffs on exports from major trading partners, against warnings from industry groups and members of his own party.
Meanwhile Wall Street indices dived in early New York trading, after European and Asian markers also fell.
About 10 minutes into trading, the Dow Jones Industrial Average was at 23,586.29, down 1.9 per cent.
The broad-based S&P 500 dropped 1.3 per cent to 2,579.46, while the tech-rich Nasdaq Composite Index shed 1.4 per cent to 6,844.34.
Shares in US aerospace giant Boeing Co fell 5.5 per cent in early trade while agricultural machinery maker Deere & Co fell 5.6 per cent. Soybean exporter Archer Daniels Midland Co was down 1.2 per cent while another agribusiness Bunge Ltd fell 1 per cent.
Investors in US technology companies were rattled since that sector has the biggest revenue exposure to China. Universal Display was down 3.7 per cent. Apple Inc fell 1.6 per cent.
Car maker General Motors Co was down 1.8 per cent while Ford Motor Co was off 2 per cent and Tesla Inc fell 4.3 per cent.
Chemical provider Chemours Co shed 2.9 per cent while DowDuPont Inc dropped 3 per cent.
"It would appear that gloves are off in relation to the trade war," wrote David Madden, market analyst at CMC Markets UK.
Analyst Fawad Razaqzada of Forex agreed, saying: "Trade war concerns remain the dominant theme in the markets."
In Europe, fears of a trade war overshadowed data showing that the eurozone's economic recovery is gaining pace, with unemployment in the bloc at its lowest level since December 2008.
An all-out trade war between China and the United States would be likely to hit economies around the world, even those exempt from tariffs imposed by President Donald Trump's America First administration.
"The proposed US tariffs on Chinese imports of Chinese goods could have knock-on effects on other EMs (emerging markets), especially in East Asia, via supply chains," Capital Economics said in a note.
"EMs would be the big losers in the event of a more marked lurch towards protectionism," it added.