China announces tariff retaliation to take effect June 1 as trade war tensions rise

China announced that it will impose additional tariffs on some American goods in retaliation for the latest increase of U.S. duties on $200 billion of Chinese imports.

The tariffs will take effect on June 1, according to a statement on the Ministry of Finance’s website on Monday. The tariffs will be imposed on some of the goods listed on a previous retaliation list from 2018.

The year-long trade frictions between the world’s two biggest economies re-escalated last week when the Trump administration announced a 25% punitive tariff on thousands of Chinese products.

The US is set to release a plan to levy a 25% additional tariff on all remaining imports from China on Monday.

The Chinese retaliatory tariffs will be imposed at different levels: 25% tariffs on 2 493 items 20% tariffs on 1 078 items 10% tariffs on 974 items 5% tariffs to continue on 595 items.

Bloomberg reported earlier that US Treasuries led a global rally in some of the world’s safest assets after Trump imposed a one-month deadline on China to agree to a trade deal or risk tariffs on all of its exports.

Yields on benchmark 10-year bonds touched the lowest level since March, correlating with a slide in the offshore yuan, widely seen as the key barometer of risk sentiment over trade. The yen rallied, building on a four-week run of gains, while European stocks fell. Traders meanwhile boosted bets on a rate cut from the Federal Reserve this year.

“I can’t see a real deal before the G-20 summit in June,” said Ciaran O’Hagan, head of European rates strategy at Societe Generale in London. “The rally is more than justified. I am surprised that bonds are not rallying more.”

The ongoing trade war has increased fear in markets that any further escalation could seriously jeopardise the global economic recovery before many of the world’s central banks have had a chance to normalise monetary policy.

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