Just when it seemed as if the United States and China were quietly making progress toward reaching a trade deal, President Donald Trump fired off a Sunday morning tweet threatening to ratchet up tariffs on Chinese imports because negotiations were moving “too slowly.”

After Trump stated that a 10% tariff on $200 billion of Chinese goods would jump to 25% on May 10 while also raising the possibility of slapping a 25% tariff on $325 billion of imports from China, investors panicked: The Dow fell by more than 450 points Monday morning, though it appeared to be on the rebound later in the afternoon. China's Shanghai Composite Index had dropped by nearly 5.6% at the close of trading.

The tweet also sparked speculation that a Chinese delegation would call off a planned visit to the U.S. this week to continue trade talks. But CNBC reported the meeting was still on, citing “sources familiar with the matter.”

“Most people were caught off-guard by the president's tweet because they thought negotiations were going well,” said Duane Layton, global head of Mayer Brown's international trade law practice in Washington, D.C.

In other words, it was another typical day of uncertainty and turmoil as the U.S.-China trade dispute carried on and the rest of the world watched and dealt with the ripple effects.  

“You have the two heavyweights in the ring and they're punching away at each other. But bystanders are not cheering this on. They want it to stop,” said Michael Woods, an international trade lawyer at Woods LaFortune in Ottawa.

Woods, who formerly served as a trade lawyer, trade negotiator and diplomat for Canada's Department of Foreign Affairs and International Trade, said U.S.-China negotiations have everyone else feeling “left away from the table.”

“We don't have a seat. We don't know what's going on,” he added.

Even worse, Canada now has a rocky relationship with China because it complied with a U.S. extradition request for Huawei Technologies Co. chief financial officer Meng Wanzhou. She's also the daughter of the Chinese tech giant's CEO and founder.

“In complying with that request, Canada's having an absolutely terrible time with China,” said international trade lawyer Clifford Sosnow, a partner at Fasken Martineau in Toronto. He added, “The irony is not lost on many Canadians.”

Still, Canada, like many other countries, hopes to benefit from whatever agreement the U.S. and China finally reach, assuming that happens. By negotiating a better trade deal for stateside companies, the U.S. could end up improving global access to the China market.

But Sosnow and Woods expressed some skepticism about the odds of that scenario coming to fruition. Woods sees the U.S. seeking a managed trade agreement, rather than a free trade deal, leaving smaller economies that have a stake in the global economy out in the cold.

“If the two countries, the U.S. and China, can find a sweet spot where they agree to a fix and where both countries are happy, that doesn't necessarily translate to an open market for anybody,” Woods said. “What happens to the rest of the world?”

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