China threatens retaliation against new US tariffs

China has threatened to retaliate against the latest round of tariffs on $US200 billion ($279bn) worth of its exports to the US.

China has threatened to fight back against the latest round of tariffs on $US200 billion ($279bn) worth of its exports to the US, with both sides now bunkering down for a long, bitter trade war.

China’s Ministry of Commerce said last night it would be forced to take “synchronised counter measures” against the latest round of tariffs announced yesterday by Donald Trump.

The Ministry said it regarded President Trump’s move with deep pity. But it said China would “have to take synchronised counter measures” to protect its “lawful interest and the global free trade order.”

The spokesman said China hoped the US would “realise the possible negative consequences of its action” and change course.

The President said the US would impose a 10 per cent surcharge on $US200bn worth of Chinese goods from next Monday, significantly widening the scope of the trade war.

He said the tariffs would rise to 25 per cent on January 1 next year, and he also threatened to impose new tariffs on another $US276bn worth of Chinese imports if China retaliated.

China’s Ministry of Commerce did not provide any detail on the scope of Chinese retaliatory measures, with its officials now believed to be examining what would be the most effective measures to take.

Both China and the US have imposed tariffs of up to 25 per cent on almost $US50bn of each other’s goods, with China arguing the issues should be resolved with more face-to-face negotiations.

China is limited in how it can respond to the US tariffs as it exports about $US500bn worth of goods to the US while the US only exports about $US130bn to China. But it has other means of retaliation given the large number of US companies doing business in China.

Mr Trump’s escalation of the trade war this week also throws in doubt plans for China to send a high-level delegation to the US next week. A delegation led by Vice-Premier Liu He was expected in Washington. But this was agreed before Mr Trump’s surprise announcement of more tariffs this week.

China’s Ministry of Commerce said last night the new tariffs had “added new uncertainties” to talks between the two sides.

Mr Trump also threatened that if China retaliated against the latest round of tariffs, the US would “immediately pursue phase three”, which would mean imposing further tariffs on another $US267bn worth of products — covering almost all Chinese exports to the US.

“If the US imposes any additional tariffs on China we will have to take the necessary countermeasures and resolutely safeguard our legitimate and legal rights and interests,” China’s Ministry of Foreign Affairs Ministry spokesman, Geng Shuang, said ahead of the announcement.

China has been battling to understand the different signals coming from Washington, with US Treasury Secretary Steven Mnuchin wanting to have further talks before the US imposed tariffs on another $US200bn worth of Chinese goods, while Mr Trump has significantly stepped up the trade war this week.

“We are under no pressure to make a deal with China, they are under pressure to make a deal with us,” Mr Trump tweeted late last week.

“Our markets are surging, theirs are collapsing. We will soon be taking in billions in tariffs and making products at home. If we meet, we meet?”

China last week welcomed news that the US wanted another round of talks.

“China always believes that escalating trade conflict serves no one’s interests,” China’s Ministry of Foreign Affairs spokesman said last week.

But the apparent olive branch from the US is now threatened by Mr Trump’s aggressive move.

China had been hoping the Trump administration’s aggression would be tempered by complaints from US companies doing business with China, which are concerned over the long-term impacts of an escalating trade war.

But it appears now that Mr Trump is determined to use China as a whipping boy ahead of the November midterm congressional elections and has no plans to negotiate any deal to resolve the situation any time soon.