Canadian sectors to watch as trade war between US and China escalates

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The question now is whether the two sides will intensify their efforts to punish each other before they sit down to negotiate.

"A trade war would be in no one's interests", said the report, adding that a trade war could affect 20 percent of the global economy.

"The seeds of a more serious conflict are there", said Adam Slater, lead economist at Oxford Economics, a consulting firm.

"Minnesota is a significant producer of both soy and wheat".

US automakers conducting business in China have not yet released any statements, waiting to see how exactly this war would mean for them.

"There is no victor in a trade war, and an initiator will harm itself as well as others".

Manufacturing is also threatened by a trade war.

The Dow Jones Industrial Average (NYSEARCA:DIA) rose 230.94 points, or 1%, to close at 24,264.30.

Meanwhile, the technology-heavy Nasdaq Composite Index (NYSEARCA:QQQ) surged 1.5% to finish at 7,042.11. The Russell 2000 got a 1.3 percent lift.

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The US and China exchanged more than $US700bn in goods and services past year, according to US figures.

President Donald Trump says Beijing is violating its free-trade commitments by pressuring foreign companies to hand over technology to potential Chinese competitors in exchange for market access. He said that will stir up political pressure against the trade sanctions.

China's economy has become less dependent on selling goods overseas in recent years, which is likely to blunt the effect of the USA tariffs, according to analysts for S&P Global Ratings.

"It's only more or less 10 percent of overall imports from China", Kamiyama said.

European stocks fell. Germany's DAX lost 0.4 percent while the CAC 40 in France dipped 0.2 percent.

The eventual rally in the USA was too late to buoy the major European markets, which finished in the red - London down 0.1 percent, Paris 0.2 percent and Frankfurt off 0.4 percent.

David Dollar, a senior fellow at the John L. Thornton China Center of the Brookings Institution, described tariffs as the wrong instrument to address US-China issues. The surprise move was a further escalation of the deepening trade dispute between the world's two biggest economies, which just days earlier announced plans for $50 billion in import duties on each other's goods. The global economy is expected to grow 3.9 percent this year, which would be its strongest showing in seven years, according to the International Monetary Fund. The company also plans to give users more information about the data it gathers and restrict the user data that outsiders can access. On Wednesday, Facebook closed with a small decline, but other big tech names such as Apple and Microsoft closed higher.

Energy: Slowing growth could have a knock-on effect on oil demand, with crude prices dipping after the latest tariff announcement.

Bond prices turned lower.