China has pledged to retaliate if President Trump goes ahead with his threat to impose more tariffs on its exports, escalating the trade war between the biggest economies in the world and rattling global markets.
Beijing said that it would not succumb to blackmail after the White House revealed plans to extend duties across almost all Chinese goods exported to the United States within weeks.
The rise in hostilities hit equities, with indices across Asia, Europe and America falling into the red. The FTSE 100 fell by 177.81 points, or 2.3 per cent, to 7,407.06, while the CAC 40 in France and the Dax in Germany fell by 3.2 per cent and 2.8 per cent, respectively.
Earlier, the CSI in China fell by 1.5 per cent and the Nikkei in Japan lost 2.1 per cent. On Wall Street, the Dow Jones industrial average closed 0.4 per cent down, while the technology-focused Nasdaq dropped by 1.3 per cent.
The US has imposed import levies on Chinese exports worth $250 billion as Mr Trump sought to assert a protectionist trade agenda. Beijing has hit back with tariffs on American products worth $110 billion.
Mr Trump surprised markets on Thursday by announcing that a new $300 billion catalogue of goods from China would face US duties of 10 per cent from September 1. This is set to include consumer goods such as mobile phones, toys and shoes.
Chinese officials expressed hope that the Trump administration would “give up its illusions” and resume negotiations based on equality and mutual respect. “If America does pass these tariffs, then China will have to take the necessary countermeasures to protect the country’s core and fundamental interests,” Hua Chunying, a foreign ministry spokeswoman, said. “We won’t accept any maximum pressure, intimidation or blackmail. On the major issues of principle, we won’t give an inch.”
Wang Yi, the Chinese foreign minister, said that introducing more tariffs “is definitely not a constructive way to solve the economic and trade frictions”.
Mr Trump indicated that talks between American and Chinese officials in Shanghai this week had failed to bear fruit. He accused Beijing of failing to deliver on a series of promises and said that President Xi was “not going fast enough” in seeking a deal.
He has vowed from the outset to shield his country “from the ravages of other countries making our products, stealing our companies and destroying our jobs” and has claimed that trade wars are “good, and easy to win”.
Mr Trump’s officials also have sought to put China’s alleged illicit trading activity, which include forced technology transfers, at the centre of talks. Mike Pompeo, US Secretary of State, lamented “decades of bad behaviour”. Beijing denied claims of economic malpractice.
The president unveiled an agreement to open European markets to American beef exports yesterday, which allows the US to fulfil up to 35,000 tons of the EU’s 45,000-ton annual quota for hormone-free beef imports. It comes after repeated threats from Mr Trump to launch a full-scale trade war against the EU, by imposing
25 per cent tariffs on all vehicles imported to America from the bloc, among other things. Negotiators from both sides of the Atlantic continue to try to thrash out a broader trade agreement.
Mr Trump said yesterday that the beef deal would increase American exports by 46 per cent in the first year and by 90 per cent within seven years, and ultimately to $420 million annually from $150 million today.
His latest blow in the tit-for- tat row with China dominated markets, however. Gold and government bonds — assets deemed to be safe havens at times of uncertainty — jumped as investors sought security. Oil prices, after their worst day in three years, recovered slightly. Brent crude rose by 2.6 per cent, or $1.56, to $62.06 per barrel.
Hu Xijin, editor of the Chinese state-run Global Times, said that Beijing “will focus on the national strategy under a prolonged trade war” and wrote on Twitter: “New tariffs will by no means bring closer a deal that the US wants, it will only make it further away.”
Oxford Economics, the consultancy, said that US-China relations had “obviously soured” further, and added: “We expect this step to make China less keen to achieve a deal and more determined to prepare itself for long-term economic tension with the US.”
