Investors - MAY 17, 2019

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U.S.-China trade tensions escalate

by Jennifer Molloy

The stakes are getting higher in the trade tensions between the United States and China, setting the scene for further concerns from investors about an economic slowdown as the world’s two largest economies answer failed trade negotiations with tit-for-tat tariff increases.

On the heels of U.S. President Donald Trump’s tariff jump from 10 percent to 25 percent on $200 billion in imported goods on May 10, China set plans to increase tariffs on $60 billion in U.S. goods on June 1.

And, as the United States’ primary debt holder, in March China notably decreased its holdings of U.S. debt by roughly $20.5 billion down to $1.12 trillion — the lowest level in two years — likely as leverage prior to the recently failed trade negotiations, according to CNBC.

“[U.S.] trade with China is less than $800 billion. For the individual companies involved in trade, this is problematic,” said Michelle Caruso-Cabrera, a CNBC contributor, on May 16, “but [the United

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