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China strikes back with higher tariffs on US$60b of US goods
CHINA said on Monday that it would impose higher tariffs on a range of US goods, striking back in its trade war with Washington shortly after US President Donald Trump warned it not to retaliate.
China's finance ministry said it plans to set additional import tariffs ranging from 5 per cent to 25 per cent on 5,140 US products on a target list worth about US$60 billion. It said the tariffs will take effect on June 1.
The announcement caused the Dow to plunge 500 points, around 2 per cent when the US market opened as investors fear escalating trade war will threaten the economy. The Standard & Poor's 500 index was down 2 per cent and the tech-heavy Nasdaq Composite fell more than 2.6 per cent, continuing last week's losses.
"Today's tit-for-tat in US-China trade tariffs has exacerbated tumbling futures out of fear that tensions could trigger a global recession," said Sam Stovall of CFRA Research.
China's retaliation came less than two hours after Mr Trump warned China not to retaliate against a hike in tariffs he imposed last week and said that the nation "will be hurt very badly if you don't make a deal". There "is no reason for the US consumer to pay the tariffs, which take effect on China today . . . China should not retaliate - will only get worse!" Mr Trump tweeted, adding that tariffs can be avoided if manufacturers shift production from China to other countries.
Mr Trump lifted tariffs to 25 per cent from 10 per cent on US$200 billion worth of Chinese imports last week. He also ordered US Trade Representative Robert Lighthizer to draft paperwork imposing tariffs on an additional US$300 billion worth of Chinese goods, which would effectively blanket all Chinese imports with duties.
The president's denial that US consumers would be affected by the spike in tariffs ran counter to the words of his own economic adviser.
White House National Economic Council director Larry Kudlow said in an interview on Sunday that "both sides" would likely suffer amid increased trade tensions with China.
Mr Trump continued to accuse China of reneging on a trade deal the two countries had been negotiating and threatened the nation with economic pain if the trade war drags on, saying that businesses will leave China in droves. "I say openly to President Xi & all of my many friends in China that China will be hurt very badly if you don't make a deal because companies will be forced to leave China for other countries. Too expensive to buy in China. You had a great deal, almost completed, & you backed out!" Mr Trump said.
China will never surrender to external pressure, the government said on Monday. "We have said many times that adding tariffs won't resolve any problem. China will never surrender to external pressure. We have the confidence and the ability to protect our lawful and legitimate rights," foreign ministry spokesman Geng Shuang told a daily news briefing.
State media also kept up a steady drum beat of strongly-worded commentary on Monday, reiterating that China's door to talks was always open, but vowing to defend the country's interests and dignity. "At no time will China forfeit the country's respect, and no one should expect China to swallow bitter fruit that harms its core interests," China's top newspaper, the ruling Communist Party's official People's Daily, said in a commentary.
State television said in a separate commentary that the effect on the Chinese economy from the US tariffs was "totally controllable". "It's no big deal. China is bound to turn crisis to opportunity and use this to test its abilities, to make the country even stronger."
White House economic adviser Mr Kudlow said on Sunday that there was a "strong possibility" Mr Trump will meet Chinese President Xi Jinping at a G-20 summit in Japan in late June. BLOOMBERG, REUTERS, WP