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The Trump administration further escalates its trade war with China, as U.S. stock futures wipe out Tuesday’s gains on the news. And Tesla makes a big splash in Shanghai. Here are some of the things people in markets are talking about.

Trump Releases New $200 Billion Chinese Tariff Target List

The Trump administration pushed ahead with plans to impose tariffs on additional $200 billion in Chinese products by releasing a list of targets, marking a sharp escalation in a trade war between the world’s two largest economies. The list of goods that may face a new 10 percent duty — which is over 200 pages long — includes clothing, television components and refrigerators as well as badger hair, bovine semen and bones. The tariffs could take effect after public consultations end on Aug. 30, according to a statement from the U.S. Trade Representative’s office. Follow our live blog for developments and analysis as the day unfolds. 

Stock Futures Erase Gains, Havens Bid

The calm financial markets have enjoyed so far this this week looks to be a thing of the past as U.S. stocks futures erased gains on the tariff news. A perceived lull in the spat had allowed the S&P 500 to rally for a fourth day Tuesday as investors shifted their focus to the start of earnings season. But it was seemingly only a matter of time before trade concerns surfaced once again. Long-end U.S. Treasuries and the yen erased losses as investors sought out havens amid concerns the release of the list will mark a rapid escalation of the trade war between the world’s two biggest economies. Investors should expect China to quickly announce counter-measures once the list is officially released.

Tesla Makes a Splash in Shanghai

Tesla Inc. reached a preliminary agreement with the Shanghai government to build a factory that will rival production from its lone U.S. assembly plant, as Elon Musk takes his biggest step yet to expand overseas. Construction will begin soon after securing needed permits and the plant will produce 500,000 electric vehicles annually for Chinese consumers in two to three years, a Tesla spokesman said in an email. Yet amid the fervor of the announcement, the absence of details on how much the ambitious undertaking will cost is turning heads among analysts and investors stateside. The Musk-led company had just $2.7 billion in cash at the end of the first quarter. Tesla has been burning through billions of dollars as it’s struggled to ramp up manufacturing of the Model 3 sedan.

Japan Is Embracing 'Buy American'

While there’s little prospect that Japanese consumers will ever buy enough American cars to please Donald Trump, the Abe government’s record spending on defense is shaping up as a bright spot in bilateral trade for the U.S. president. Japan’s purchases through the U.S. Foreign Military Sales program represent 16 percent of all non-personnel costs for the nation’s self defense forces so far this year, more than double the level in 2014, according to calculations by Bloomberg based on government data. Plans to buy advanced American radars, stealth fighter jets and missile-defense systems in coming years will mean billions of dollars for U.S. weapons makers. Japanese companies, already struggling to compete, don’t stand to benefit as much because economies of scale have made homegrown technology more expensive and Prime Minister Shinzo Abe’s government wants to get more bang for its buck.

1MDB, the Ponzi Scheme

Malaysia’s 1MDB economic development fund was used as a Ponzi scheme by a clutch of conspirators to pay bribes and enrich themselves, Switzerland’s top prosecutor said days after former Malaysian Prime Minister Najib Razak was charged with corruption for his role in the affair. Swiss authorities are now investigating six people for their alleged involvement in the multi-billion dollar 1MDB scandal and two Swiss banks – Falcon Private Bank and BSI SA – remain under suspicion, Swiss Attorney General Michael Lauber told reporters Tuesday in Putrajaya following a meeting with his Malaysian counterpart Tommy Thomas.

What we’ve been reading

This is what caught our eye over the last 24 hours.

• An entire Thai soccer team has been rescued from the cave where they had been trapped.
• The season's first typhoon is heading for Taiwan. 
• China's technology sector is taking on Silicon Valley.
• Blackstone is said to seek $20 billion for its next global private equity fund.
• Xiaomi gained back $6 billion in market value in a rebound from its weak Hong Kong debut.
• Facebook faces a $664,000 fine over the  Cambridge Analytica inquiry.
• The trade war could make your martini more expensive.

To contact the editor responsible for this story: Boris Korby at bkorby1@bloomberg.net, Alyssa McDonald

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