US economy

China promises ‘retaliation’ against new US tariffs


Beijing vowed to retaliate against Donald Trump on Tuesday, saying the US president’s decision to slap tariffs on more than half of all Chinese imports had undermined efforts to reach a negotiated settlement and would spark counter-measures.

“We have been stressing that talks need to happen on the basis of parity, equality and good faith,” a foreign ministry spokesperson said at a daily briefing. “What the US has done shows no sincerity and good faith at all.”

In a separate statement China’s commerce ministry, which led the last round of trade talks with the US, said Beijing would adopt “other tariff escalation measures”. In August, the Chinese government said it would impose retaliatory tariffs on US exports worth $110bn — or about 85 per cent of the total. 

The commerce ministry added that the move brought “new uncertainty to consultations between the two sides”. 

Mr Trump’s decision, which was announced on Tuesday morning Beijing time, dimmed hopes that a negotiated settlement between the two sides might be possible over coming months. 

Mr Trump slapped a 10 per cent tariff on about $200bn worth of Chinese imports beginning next week and threatened to increase the rate to 25 per cent in 2019 if no deal was reached to ease trade tensions between the US and China.

In remarks earlier on Tuesday, a senior Chinese securities regulator criticised the US president for “poisoning” the atmosphere for negotiations.

“He tries to put pressure on China so he can get concessions,” said Fang Xinghai, who also works closely with Mr Liu. “That kind of tactic is not going to work.” Mr Fang was speaking at a World Economic Forum event, which will be formally opened by Premier Li Keqiang on Wednesday. 

On a trip to Beijing earlier this month, Blackstone chairman Stephen Schwarzman helped broker an offer by US Treasury Secretary Steven Mnuchin to meet Vice Premier Liu He for a fifth round of trade talks, according to two people briefed on the effort. 

The people added that Wang Shouwen, a vice commerce minster who led a Chinese negotiating team to Washington in August, was due to fly to the US capital this week for preliminary discussions about Mr Mnuchin’s offer. 

Chinese officials and analysts said it was highly unlikely that Mr Wang’s trip, which was never formally announced, would now go ahead. “Given this new round of destructive tariffs, it is doubtful where, when and at what level the two sides will hold negotiations,” said Lü Xiang at the Chinese Academy of Social Sciences. 

“Sino-US relations have reached their worst moment in 40 years,” Mr Lü added. “We don’t know if Trump has a Plan B to get out of the quagmire.” 

However, one person briefed by Chinese officials on Tuesday afternoon said the Trump administration’s decision to start the newest tranche of tariffs at 10 per cent — before potentially raising them to 25 per cent next year — could still provide room for the two sides to manoeuvre.

“They were still trying to figure out what to make of the statement because it has so many different signals,” the person said. “A 10 per cent tariff is not going to be earth-shattering for the Chinese economy.” 

Chinese officials have said that the initial $20bn impact of the new tariffs — or even $50bn if the 25 per cent rate takes effect — could be softened by fiscal and other measures. 

After the latest round of tariffs take effect, Chinese exports to the US worth just over $250bn — or about half of last year’s total — will have been targeted by Mr Trump. In his statement on Monday, the US president reiterated earlier threats to tax all Chinese exports if Beijing followed through with its pledged retaliation measures. 



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