Investing.com - All eyes were on escalating trade rhetoric this week as investors attempted to work out whether a series of tit-for-tat responses between the U.S. and China will end in negotiations or an all-out trade war between the world’s two largest economies.
The Trump administration raised the stakes in its trade dispute with China, threatening 10% tariffs on an extra $200 billion worth of Chinese imports late Tuesday, pushing the world's two biggest economies ever closer to a full-scale trade war.
The tariffs will not go into effect immediately but will undergo a two-month review process, with hearings August 20-23.
Washington proposed the extra tariffs after efforts to negotiate a solution to the dispute failed to reach an agreement, senior administration officials said.
China accused the U.S. of bullying and warned it would hit back, but did not immediately say how it would retaliate.
It was the latest development in escalating trade tensions between the world's two largest economies.
Last week, Washington imposed 25% tariffs on $34 billion of Chinese imports, and Beijing responded immediately with matching tariffs on the same amount of U.S. exports to China.
Investors are worried that threats of higher U.S. tariffs and retaliatory measures by others could hit global growth and damage sentiment.
Meanwhile, in Europe, President Donald Trump participated at a summit of leaders of NATO countries in Brussels, where he reiterated the U.S. commitment to NATO and claimed credit for an agreement that he says will "significantly" increase military spending among the 29-member states.
Trump denied reports that he had threatened to pull out of the alliance, but nonetheless said he "probably could" withdraw from the treaty without congressional approval. However, he said such a move wasn't necessary given the agreements reached following a two-day summit in Brussels in which he took a "very firm" tone with its alliance allies.
The President's comments follow reports that he slammed NATO leaders again Thursday over what he has described as a lack of financial commitment to the military defence of America's European allies.
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