'Bullyism': China says it won't negotiate on trade with the US as the latest tariffs bite

LONDON — European and Asian markets were lower on Monday after China said it won't negotiate with the US on trade if the Trump administration continues to threaten higher tariffs.

China published a white paper on Monday that attacked the "protectionist practices" and "trade bullyism practices of the U.S. administration," according to state-run Chinese news service Xinhua.

Beijing said that the Trump administration has "abandoned the fundamental norms of mutual respect and equal consultation that guide international relations." Bloomberg reported that the white paper stated that trade negotiations “cannot be carried out under the threat of tariffs," suggesting talks between the two sides are unlikely.

The white paper came as a fresh round of tariffs came into force against Chinese goods coming into the US. The duties on $200 billion worth of imports came into effect just after midnight on Monday morning Washington time. China has promised to respond with tariffs on $60 billion worth of US imports.

"While these actions seem to be already priced in, investors are becoming increasingly worried that the trade war may enter phase III," Hussein Sayed, the chief market strategist at trading platform FXTM, said in an email on Monday morning. "With Beijing canceling planned trade talks on Saturday and the US State Department imposing sanctions against China’s defense agency, relations between the two largest economies in the world may further deteriorate."

Markets reacted negatively to the most recent developments in the tit-for-tat trade dispute with the US and China. Stock markets in China and Japan are closed for a local holiday on Monday but Hong Kong's Hang Seng index remains open and was down by 1.66% at 8.30 a.m. BST (3.30 a.m. ET).

Negative sentiment spread to Europe, with stock indexes opening lower there too. Germany's Dax was down by 0.45%,France's CAC 40 was down by 0.25%, and Britain's FTSE 100 was down by 0.17% after around half an hour of trade in Europe.

"The implementation of President Trump's tariffs and the Chinese reaction to cancel talks in the face of the US President's decision should force investors to come to grip with reality," Konstantinos Anthis, head of research at ADSS, said in an email on Monday. "However, whether this will take a meaningful toll on the upwards trend in place or will only trigger a short-term correction remains to be seen."

Separately on Monday, Australian investment bank Macquarie said that Mexico stands to benefit the most from rising trade tensions between the US and China.

'Bullyism': China says it won't negotiate on trade with the US as the latest tariffs bite

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