Ratcheting up tension ahead of talks in Washington, China vowed Thursday to defend its own interests and retaliate if President Donald Trump goes ahead with more tariff hikes in a dispute over trade and technology.
Minutes after the USA increased punitive duties on $200 billion in imports from China from 10 to 25 percent, the Chinese commerce ministry said it "deeply regrets" the move and repeated its pledge to take "necessary countermeasures", without elaborating.
Despite weeks of glowing statements about "progress" in trade talks with China, Trump on Sunday (May 5) rattled stock markets when he announced on Twitter that tariffs on US$200 billion worth of Chinese-made products would rise from 10 percent to 25 percent.
Beijing responded with penalties on 110 billion dollars (£85 billion) of American imports, but is running out of goods for penalties due to their lopsided trade.
Federal Register said the increased tariffs will be applied to USA -bound goods exported from China. Chinese officials have said they will retaliate with higher tariffs on US goods. Two days of trade talks between the USA and China ended without a deal to avert more tariffs.
Liu told reporters upon his arrival that he came to Washington with sincerity, saying that under the current special circumstances he hopes to engage in rational and candid exchanges with the US side.
However, the announcement did not affect United States plans to more than double the tariffs on $200bn worth of Chinese imports to 25 percent - dashing hopes that Trump might decide to hold off at the last minute as the negotiations continued.
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"A major concern here, the products would be deemed mission-critical and the United States would prevent shipments to China, or tax them heavily (a large buyer of GPUs)", said Steves.
Some in China see the trade war as part of an attempt by the U.S. to curb its rise, with Western governments increasingly nervous about China's growing influence in the world. "You can't do that", Trump said on Thursday. Donald Trump's latest tariff hikes on Chinese goods took effect Friday, May 10, 2019.
Since then, the US has implemented a number of hikes on Chinese products.
Liu said on his arrival in Washington that the prospects for the talks were "promising", but warned that raising tariffs would be "harmful to both sides", and called instead for cooperation.
Hence, there's still a chance for a deal to be struck but I wouldn't expect it to be a lasting truce between the two countries. But second - and potentially under-appreciated - is the degree of exposure many United States tech companies have to Chinese markets. Officials did not speak to reporters as they left but, following the talks, Trump held a meeting with Lighthizer and Mnuchin. "And they'll see what they can do", he said. The S&P 500 rose by 0.37 percent. He has threatened to add even more tariffs, putting duties on virtually all goods coming into China.
The biggest Chinese import sector affected by the rate hike is a $20 billion-plus category of internet modems, routers and other data transmission devices, followed by about $12 billion worth of printed circuit boards used in a vast array of US- made products.
The two countries are sparring over United States allegations that China steals technology and pressures American companies into handing over trade secrets, part of an aggressive campaign to turn Chinese companies into world leaders in robotics, electric cars and other advanced industries.
Even some business owners wary of Trump's tariffs agree the president is on to something.