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Just two weeks ago, the United States and China seemed to be gliding toward a trade deal meant to resolve tensions between the world’s two largest economies. But the  breakdown  in talks since — the United States raised tariffs to 25 percent on $200 billion of Chinese imports, for example, and is threatening to tax an additional $300 billion — worries people who study international economic diplomacy. That’s because both the United States and China seem to be digging into their positions in ways that will be hard to resolve with the mutual face-saving that typically turns high-stakes negotiations into deals. To use a common negotiating metaphor, it is not clear what the off-ramps might be that would allow a de-escalation and prevent a major trade war that would prove costly to both nations. In effect, President Trump appears to view continuing tension with China as good for him politically and has said, contrary to the view of mainstream economists, that tariffs are ...

Deepening a trade battle and sending financial markets into a tailspin, China announced Monday it was raising tariffs on $60 billion of U.S. goods in retaliation for the latest hike in U.S. tariffs on its exports. The Finance Ministry said Monday the new penalty duties of 5% to 25% on hundreds of U.S. products including batteries, spinach and coffee will take effect June 1. That followed Trump's increase on Friday of duties on $200 billion of Chinese imports from 10% to 25% after charging that China had backtracked on commitments it made in earlier negotiations in a dispute over Beijing's technology ambitions and perennial trade surplus. Resuming his messages over Twitter early Monday, President Donald Trump warned Chinese President Xi Jinping (shee jihn-peeng) that China "will be hurt very badly" if it doesn't agree to a trade deal. Trump tweeted China "had a great deal, almost completed, & you backed out!...

Stocks fell sharply Monday, giving back the gains from a strong turnaround in the previous session, after China decided to raise tariffs on some U.S. goods as the ongoing trade war between the world’s largest economies intensified. The Dow was down 700 points, while a steep drop in the tech sector pushed the S&P 500 down by 2.7%. The Nasdaq dropped 3.5%. China will hike tariffs on $60 billion worth of U.S. imports, starting on June 1. The goods targeted include a broad range of agricultural products. This comes after President Donald Trump raised tariffs on Chinese imports last week. China said in a statement that the U.S.′ decision jeopardized the interests of both countries and does not meet the “general expectations of the international community  according to a Google translation. Trade bellwether Caterpillar fell 5%, while Apple dropped 5.2%. Boeing shares declined more than 3% amid speculation the airplane maker could be singled out by China in the trade war. A...