China confirmed reports that it was pulling out of U.S. agriculture as a weapon in the ongoing trade war.
A spokesperson for the Chinese Ministry of Commerce said Chinese companies have stopped purchasing U.S. agricultural products in response to President Trump’s new 10% tariffs on $300 billion of Chinese goods.
“This is a serious violation of the meeting between the heads of state of China and the United States,” the Minister of Commerce said in a statement Monday that was translated via Google.
The department also said it would “not rule out” tariffs on newly purchased agricultural goods after August 3.
China is one of the largest buyers of U.S. agriculture. Bloomberg News reported that Beijing may stop importing them completely in response to new tariffs by the United States. According to reports by Chinese State media, it would also consider slapping tariffs on U.S. agricultural products that it already bought.
Those stories helped exacerbate fears on Wall Street pushing stocks to their worst day of the year. Now that China has confirmed the reports, it could add to pressure on equities. Stock futures fell Monday, implying a 480 point drop Tuesday.
U.S. farming has been a hot-button issue in the ongoing trade war. The president said that he had secured large quantities of agricultural purchases when he met with President Xi Jinping at the G-20 summit in June. Trump later accused China of not following through, leading him to announce on Thursday 10% tariffs on the remaining $300 billion in Chinese imports.
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China, which has historically managed its currency, let the yuan break to its lowest level against the dollar in more than 10 years on Monday.
The Treasury Department labeled China as a currency manipulator on Monday evening, following tweets by the president with that same accusation. “This is a major violation which will greatly weaken China over time,” Trump said. Later in the day, he tweeted that it is “now even more obvious to everyone that Americans are not paying for the Tariffs – they are being paid for compliments of China, and the U.S. is taking in tens of Billions of Dollars.”