Wall Street closes down sharply again as US-China trade war looms

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It is more than likely for China to impose further tariffs on United States imports worth billions of dollars, and restricting USA agricultural products such as soybeans- one of the major American exports to China, This has been seen as one option that would hurt U.S. farmers, a segment of Trump's base.

Trump repeated on Thursday that he wants a $100 billion reduction in China's trade surplus, while his top trade negotiator, Robert Lighthizer, said fundamental changes that allow USA companies to keep their technological edge over Chinese competitors were critical to the future of the US economy.

And while the president has repeatedly touted the success of his policies by pointing to the soaring stock market, the blue-chip Dow Jones Industrial Average has lost 3000 points since it peaked three months ago.

The risk of a U.S-China trade war is a regional concern, given the myriad supply chains and other ties across Asia.

The likely victor of this trade war will be other countries, particularly countries from South America.

Policy makers across the world are warning of a brewing trade war that could undermine the broadest global recovery in years.

But China stopped short of penalties on the biggest salvos in a potential trade war, leaving off soybeans, sorghum and Boeing aircraft, indicating Beijing may be looking for leverage in any negotiations with the United States, the newswires said.

"China would fight to the end to defend its own legitimate interests with all necessary measures", China's embassy in Washington said in a statement late Thursday.

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"If anything, a few weeks ago we anxious about the economy overheating and inflation picking up", McCain said.

China's ambassador to the United States, Cui Tiankai, declined to rule out cutting purchases of U.S. Treasury debt in the dispute, telling Bloomberg Television on Friday: "We are looking at all options".

But after the close, the analysts said the market was "quickly accelerating to the downside in the final hour of trading, as the potential ramifications of the recent tariffs imposed on China continued to weigh on investors' minds".

However, Chinese authorities retaliated against increase in tariffs by targeting the USA agricultural products that rely heavily on the Chinese export market. Her interview came as CBS's "60 Minutes" said it's going ahead with plans to broadcast an interview on Sunday with adult film star Stephanie Clifford, better known as Stormy Daniels. "I have tremendous respect for President Xi", Trump said.

USA officials widely agree that China has stolen U.S. technology and trade secrets.

"The only thing we are interested in seeing from the Chinese side is action", one senior official, who was not authorized to speak on the record, told reporters. "They won't clip the wings of China Inc", he said.

Now the US administration appears to be taking aim at the entire structure of the Chinese economy, with its huge state-owned companies and state-backed attempts to corner key technologies of the future.

"Conflict is unavoidable", said Hui Shousheng, a researcher at the Tsinghua National Strategy Institute in Beijing.