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US markets end lower on US-China tariff worries

The US markets ended lower with cut of over one and half percent on Tuesday after US Trade Representative Robert Lighthizer confirmed the US plans to raise tariffs on $200 billion worth of Chinese goods to 25 percent on Friday. President Donald Trump threatened to implement the tariff increase, claiming trade talks between the US and China are moving too slowly. The confirmation of the Friday deadline may have shattered the belief that the threat from Trump was just a negotiating tactic. Lighthizer attributed the potential tariff increase to an erosion in commitments by China over the last week, with the trade representative calling substantive changes to the text of a deal unacceptable. Treasury Secretary Steven Mnuchin noted the US would reconsider raising the tariffs if negotiations get back on track during the next round of talks later this week.

Traders have largely shrugged off reports that Chinese Vice Premier Liu He is expected to join this week's talks. On the economic front, with a modest drop in revolving credit partly offsetting an increase in non-revolving credit, the Federal Reserve released a report showing US consumer credit rose by less than expected in the month of March. The Fed said consumer credit rose by $10.3 billion in March after climbing by an upwardly revised $15.4 billion in February. Street had expected consumer credit to increase by $16.0 billion. Non-revolving credit such as student loans and car loans climbed by $12.4 billion in March, matching the increase seen in the previous month. Meanwhile, the report said revolving credit, which largely reflects credit card debt, edged down by $2.2 billion in March after rising by $3.1 billion in February.

Dow Jones Industrial Average dropped 473.39 points or 1.79 percent to 25965.09, Nasdaq declined 159.53 points or 1.96 percent to 7963.76 and S&P 500 was down by 48.42 points or 1.65 percent to 2884.05.

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