China yesterday threatened retaliation if US President Donald Trump’s planned tariff hikes go ahead, while the renewed acrimony between the two biggest global economies sent stock markets tumbling.
The Chinese government accused Trump of breaching his June agreement with Chinese President Xi Jinping (習近平) to revive negotiations aimed at ending a costly fight over Beijing’s trade surplus and technology ambitions.
Trump rattled financial markets with Thursday’s surprise announcement of 10 percent tariffs on US$300 billion of Chinese imports, effective Sept. 1.
Photo: EPA-EFE, David Chang
That would extend punitive duties to everything the US buys from China.
If that goes ahead, “China will have to take necessary countermeasures to resolutely defend its core interests,” Chinese Ministry of Foreign Affairs spokeswoman Hua Chunying (華春瑩) said yesterday.
“We don’t want to fight, but we aren’t afraid to,” Hua told a regular news briefing.
She urged Washington to “abandon its illusions, correct mistakes and return to consultations based on equality and mutual respect.”
“Imposing tariffs is definitely not the right way to resolve trade frictions,” Chinese State Councilor Wang Yi (王毅) told reporters in Bangkok, where he was attending an ASEAN foreign ministers’ meeting.
Washington earlier imposed 25 percent tariffs on US$250 billion of Chinese products.
Beijing has retaliated by raising import duties on US$110 billion of US goods.
China is about to run out of US imports for retaliation due to their lopsided trade balance. It last year imported about US$160 billion of US goods.
However, regulators have extended retaliatory measures to include slowing down customs clearance for US companies, and putting off issuing licenses in insurance and other fields.
Beijing is also threatening to release an “unreliable entities” blacklist of foreign companies that might face restrictions on doing business with China.
Plans for that were announced after Washington in May imposed crippling restrictions on sales of US technology to Chinese tech giant Huawei Technologies Co (華為).
Trump’s announcement surprised investors after the White House said that Beijing promised to buy more farm goods.
It came as their latest trade talks ended in Shanghai with no sign of a deal.
Officials said that they would resume next month in Washington.
The announcement “is likely to put a comprehensive deal further out of reach,” Fitch Solutions said in a report.
Tokyo’s main stock market index fell 2.5 percent by midday and Hong Kong’s benchmark lost 2.3 percent. Indices in Shanghai, Sydney and Seoul also declined.
Earlier on Wall Street, the benchmark S&P 500 fell for a fourth day, losing 0.9 percent, while the Dow Jones Industrial Average declined 1 percent and the NASDAQ Composite ended 0.8 percent lower.
Trump’s earlier tariffs were intended to minimize the effects on ordinary Americans by focusing on industrial goods, but the new tariffs would hit a vast range of consumer products, from cellphones to silk scarves.
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