China escalates trade war with US

Stocks plummet overnight as China's central bank sets the Yuan at its lowest value in over a decade. ABC News' Mona Kosar Abdi reports.
2:15 | 08/06/19

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Transcript for China escalates trade war with US
Good Tuesday morning everyone we begin with escalating trade war with trying and the growing concern about its affect on the US economy. Asian markets are sinking but holding steady this morning after Wall Street's biggest downturn this year an overnight we got new reaction from the white. House ABC's medica -- Abdi has the very latest from Washington Mona good morning. Good morning today good morning to you Kenneth the move was unexpected but the drop suggests that the central bank of China is willing to weaponized its currency. And this is trade war. The latest chapter and the trade war between the US and China sending US and Asian stocks into a freefall. In its worst trough of the year the Dow Jones plunge 767. Points. And S&P was down 3%. The market buckling after China sharply escalated the trade war. Allowing its tightly controlled currency to drop to the weakest level in more than a decade there's a very potent and economists scary. Weapon to use in. Any trade battle the move a retaliation in response to president Trump's new stiffer tariffs on Chinese goods. Which taxes virtually all Chinese imports. Late clothing Smartphones televisions and toys White House treat advisor Peter Navarro on Fox Business called it an overreaction. You get the day traders movement and good people loss and mourning today because they got shaken out of the market. But the underlying fundamentals are absolutely solid as a rock. Remember this. I've got these vacated billions and billions of dollars from giant. But the tax is actually paid to US customs by US businesses when the goods and to our country. Passed on to the consumer. China also delivering a blow to US farmers announcing it has asked state owned firms to stop buying US agricultural products over ninety US Treasury Department labeling China. The currency manipulator and saying it would work with the International Monetary Fund. To quote eliminate the unfair competitive advantage created by China's leaders actions. And it's important to note that designating China as a currency manipulator could pave the way for more US sanctions against the country so investors. Definitely keep paying attention to this escalating trade war to bank and a panel be watching magic could impact 401K is motive there in Washington think you.

This transcript has been automatically generated and may not be 100% accurate.

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