Chinese Ministry of Commerce has suspended the purchase of U.S. agricultural products as a retaliatory measure against new tariffs, CNBC reported on August 5.
The Chinese Minister of Commerce Zhong Shan believes that a new 10% tariff on $300 billion of Chinese goods introduced by the U.S. is “a serious violation” of the agreement recently reached by presidents Donald Trump and Xi Jinping.
According to the Ministry’s spokesperson, China has already stopped purchasing agricultural products from the U.S. in response. Moreover, the Chinese government has said that it is considering subjecting the goods bought after August 3 to additional tariffs.
The decision was followed by a massive drop in the U.S. market indexes, which saw their worst day in 2019 so far. S&P 500 was down almost 3% on the day, while the Nasdaq Composite and Dow lost 3.47% and 2.9% respectively.
Per the statistics provided by the U.S. Census Bureau, China is one of the largest buyers of U.S. agricultural products with over $5.9 billion worth of goods imported annually. However, China is still outranked by the Mexican, Canadian and Japanese markets.
The latest escalation in the trade war between China and the U.S. happened last Thursday, August 1, when Donald Trump imposed an additional 10% tariff on $300 billion of Chinese goods. As a result, the Chinese yuan dropped to 7.03 per U.S. dollar — its lowest level since 2008.