Just as what many experts thought would happen following their trade meeting in Shanghai last week, China did not waste time and said it was shying away from buying US farm products, a move that jolted stock markets around the world.
The Chinese commerce ministry's decision to halt its purchase of agricultural products from the US signifies the latest escalation in the country's economic war with the Americans after the failed talks and stressed it does not rule out imposing more tariffs after US President Donald Trump intensified tensions with its biggest agricultural trading partner last week.
Trump vowed to thrust a 10% tariff on $300-billion worth of Chinese products starting September 1, a move Chinese trade officials consider a "serious violation" of the agreement signed by Trump and Chinese leader Xi Jinping in Japan last June.
Commerce officials in Beijing were astounded by Trump's latest decision, according to sources who have been involved in the trade discussions, and China has vowed to respond with their own impositions if Washington pushes through with another tariff.
The US stock market crashed on Monday to its worst loss since January this year and investors around the globe scuttled to sell on fears on how much President Donald Trump's deepening trade conflict will damage the world economy.
According to Rich Weiss, a chief market officer of American Century Investments, "I am surprised at the market's surprise at China's retaliation... we started a fight, and when the opponent punches back, I'm not sure why we're surprised."
China's latest act of defiance took a heavy toll on its currency, which fell to an 11-year low. The move also sent shivers to key markets in Asia. On Wall Street, the Dow Jones Industrial Average (DJIA) collapsed over 850 points around mid-afternoon, Monday. Earlier, stocks were likewise reeling from London to Shanghai.
The US currency dropped 106.03 Japanese yen from 106.56 yen on Friday, as the euro fell $1.1102 from $1.1113.
Together, the devaluation in China's currency and its suspension of farm produce from the US suggest that it has made up its mind to stand tough, rather than bow to Trump's demands.
Technology stocks were the biggest casualty of Monday's major sell-off, with Apple falling 5.3%. The iPhone-maker does not only rely on China's assembly lines to manufacture its gadgets, but China is also the only nation aside from the US that accounts for over 10% of US sales.
