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Wall Street recovers but trade war fears simmer

Credit: Reuters Studio
Published on August 7, 2019 - Duration: 02:37s

Wall Street recovers but trade war fears simmer

Stocks bounced-back Tuesday from the worst day of the year but the escalating trade war between the United States and China showed little sign of a major de-escalation.

Conway G.

Gittens reports.

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Wall Street recovers but trade war fears simmer

EDITOR'S NOTE: A PREVIOUS VERSION OF THIS VIDEO WAS PUBLISHED THAT SHOWED VIDEO OF SOUTH KOREA WHEN SPEAKING OF CHINA.

THAT VIDEO HAS NOW BEEN REPLACED.

A return to relative calm on Wall Street - Tuesday - one day after an escalation in the trade wa between the U.S. and China sent stocks plunging, in their worst sell-off of the year.

The Dow bounced off a two-month low - rising for the first time in six sessions... But trade war tensions are still simmering.

As President Trump tried to downplay fears the two sides are heading for a prolonged showdown, White House economic advisor Larry Kudlow said Washington is in a stronger position than Beijing and that the President will only sign off on the right deal.

He said the two sides will meet again in September.

SOUNDBITE (ENGLISH) LARRY KUDLOW, WHITE HOUSE ECONOMIC ADVISER, SAYING: "China is slashing its prices, that's killing their profits and their companies.

Production and supply chains are moving out of China.

We have elasticity of demand.

Our importers can shop elsewhere outside of China, that's hurting China.

The economic burden is falling vastly more on them than us." China isn't backing down either.

The official newspaper of the Communist Party on Tuesday accused the U.S. of trying to "deliberately destroy international order." The harsh rhetoric out of Beijing - A response to Washington's decision to label China a currency manipulator for the first time since 1994 -sparking fear the trade war was morphing into a more damaging currency war.

Reuters trade correspondent David Lawder: SOUNDBITE (ENGLISH) REUTERS TRADE CORRESPONDENT DAVID LAWDER, SAYING: "I think this is symbolic of the negotiations between the United States and China really devolving and breaking down and the Treasury is sort of weaponizing currency as one, as another avenue to put pressure on China.

It remains to be seen how much pressure this will actually puts on the Chinese.

It is sort of a symbolic label, if you will, the penalties associated with it are not very strong." But sometimes harsh words and actions don't always line up.

Investors took some comfort Tuesday in a decision by China's central bank to fix the yuan to the dollar at a slightly stronger rate than hoped.

One day after it allowed the currency to slide to the lowest since the financial crisis.

Beyond Wall Street, this trade war is also playing out in America's heartland.

Tuesday, President Trump vowed to offer even more aid to farmers after China ordered its companies to stop buying U.S. agricultural goods across the board.

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