IHS Markit recorded a reading of 50.5 in May for its Purchasing Managers’ Index (PMI), down from 52.6 in April and its weakest score since 2009. The slowdown in factory activity comes as global investors remain on edge from the increasingly bitter trade war between the US and China, with both sides locked in a tit-for-tat tariff spat. US President Donald Trump recently ramped up tariffs on a list of $200billion worth of Chinese imports from 10 percent to 25 percent. The American leader has also vowed to slap 25 percent tariffs on an additional $300billion worth of Chinese goods unless the two sides reach an agreement.

China has retaliated to US aggression by raising duties on a revised list of $60billion worth of US products to as high as 25 percent.

In its latest warning to Washington, Beijing said it was ready to use its supply of rare earths, a group of 17 chemical elements used in everything from high-tech consumer electronics to military equipment, as leverage.

In a direct threat to the US, China’s Communist Party newspaper, People’s Daily, declared: “Don’t say we didn’t warn you.”

Chinese production accounted for 80 percent of US imports of rare earth substances between 2014 and 2017.

Data on Monday showed factory activity across most Asian countries contracted last month, indicating tariff wars were taking a toll.

Last week also saw President Donald Trump vow to impose crippling tariffs on imports from Mexico in a dispute over illegal immigration.

The tariffs will start at five percent, commencing on 10 June, 2019, and will continue to surge over a series of months.

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In a statement issued by the White House, President Trump said the rate would increase to 10 percent on July 1.

It will then rise to 15 percent on August 1, 20 percent on September 1 and to 25 percent on October 1.

President Trump tweeted: “On June 10, the United States will impose a five percent Tariff on all goods coming into our Country from Mexico, until such time as illegal migrants coming through Mexico, and into our Country, STOP.

“The Tariff will gradually increase until the Illegal Immigration problem is remedied, at which time the Tariffs will be removed.

“Details from the White House to follow.”

Cornerstone Macro LLC researcher Roberto Perli said: “There was a big change in the bond market.

“We don’t like to utter the word ‘recession’ lightly, but the bond market reaction on Friday in response to the Mexico tariff news was ominous.”

Morgan Stanley economist Chetan Ahya warned this week how the global economy could be plunged into major recession in less than a year if the US-China trade war continues to escalate.

Mr Ahya said the outcome of the trade war “is highly uncertain” but warned the global economy could collapse “in three quarters”.

He said: “We could end up in a recession in three quarters.

“Is such a prognosis alarmist? We think otherwise.”



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