The US and China have moved to within 36 hours of a full-scale trade war after Washington published a list of imported products that will face higher tariffs from Friday.
In a clear sign of Washington’s hardline approach in talks with Beijing, the US trade representative’s office filed the formal paperwork needed to increase duties on $200bn (£153bn) of Chinese goods from 10% to 25% later this week.
Donald Trump held out the prospect that China would make concessions at an 11th-hour meeting in Washington but financial markets – unsettled by the most serious threat of protectionism since the 1930s – were downbeat about a breakthrough. China has threatened to retaliate against any step up in US action.
Share prices have been rising since the turn of the year on hopes that the world’s two biggest economies would settle their differences.
But the mood has darkened in the past week after the Trump administration accused Beijing of backtracking on measures the US believed had been agreed. These included addressing issues such as the theft of US intellectual property and trade secrets; the forced transfer of technology; competition policy; access to financial services and currency manipulation.
After a fall of almost 500 points on Tuesday, the Dow Jones industrial average closed with little change on Wednesday but the jittery mood led to investors seeking out traditional safe havens such as gold.