China responds to Trump's tariff threat as trade rift widens

Beijing has vowed to retaliate if the U.S. insists on adding additional tariffs to the rest of Chinese imports, as President Donald Trump abruptly escalates a trade war between the world's largest economies that has sent stocks tumbling across three continents.

Trump announced Thursday that he would impose a 10 percent tariff on more than $300 billion worth of Chinese imports, a move set to hit U.S. consumers more directly than his other tariffs so far. now. The new mandates, which Trump said could raise prices much higher, will be in place starting Sept. 1 in a long list of goods expected to include smartphones. laptops and children's clothing.

"China has a lot to do to turn things around," Trump said at an event on Friday. "Honestly, if they don't do it, I can always raise it a lot.

If the U.S. is going to implement additional tariffs, China will have to take the necessary countermeasures, U.S. State Department spokeswoman Hua Chunying said during a regular briefing in Beijing on Friday. She did not clearly state what the measures will be.

China will not accept any maximum pressure, threats, or blackmail and will not compromise on all major issues.

The S&P 500 fell for the fifth day in a row , recording its biggest weekly decline of the year. The Stoxx Europe 600 index also fell, as did stock markets in Asia. Offshore yuan edged closer to record lows green.

White House economic adviser Larry Kudlow, in an interview on Bloomberg TV, confirmed the administration is planning to impose a 10 percent tariff on some Chinese imports on Sept. 1. "But the signal is likely not. "A lot of good things can happen in a month," he said.

Return tariffs

President Donald Trump announces tariffs on $300 billion of Chinese imports

Source: Bloomberg

The threat to impose de facto tariffs on all U.S. imports from China marks the Trump administration's biggest escalation ever and brings an unexpected end to a ceasefire that has taken place only since he met with Xi Jinping. Chinese counterpart, in Osaka at the end of June.

Officials in Beijing were stunned by Trump's announcement, according to Chinese officials who have been involved in trade talks.

Chinese Foreign Minister Wang Yi had his first official reaction to Trump's escalation before Friday.

He has introduced new tariffs that are not at all the right solution to trade friction, he told a local Chinese television station while attending an ASEAN meeting in Bangkok.

The strained relationship between Washington and Beijing is showing up in economic data. In the first six months of the year, China was the third-largest trading partner of the United States, trailing Mexico and Canada and slipping out of the top spot held in 2018. The U.S . goods trade deficit with China rose in June to a five-month high Trump's efforts to narrow it.

As for the Chinese, Trump is losing his last credibility here, and whether the talks can be held in September as planned. Zhou Xiaoming, a former official and diplomat of the Ministry of Commerce, said. Deal or no deal, China prepares for the worst-case scenario.

In a tweet, Trump said that China had failed to fulfill the promise Xi made in Osaka to buy U.S. agricultural products and prevent illegal exports of fentanyl. The president later told reporters that he did notHe is interested in all issues of negative reaction from the market.

Purchase Discount

"I think they want to try and make a deal with us, but I'm not sure," Trump said during a rally Thursday night in Cincinnati. Until there is such a deal, we will tax out of China.

Trump has repeatedly complained that China has not made the bulk of the agricultural products he claimed Xi promised when they met in Osaka, but what was actually promised has never been made public and understood of the two sides seem different.

China's purchases from U.S . farmers have clearly declined over the past year, with soybean purchases falling in the first half of this year to their lowest level in more than a decade. At the same time, in the past two weeks, China has approved the purchase of up to 3 million tonnes of soybeans, 50,000 tonnes of cotton, plus pork, corn and sorghum from the United States as part of goodwill measures .

Not enough

Six people familiar with the discussions said that during meetings with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin in Shanghai earlier this week, the Chinese side did not make a new proposal. Thathas been out of an impasse in negotiations on the content of the agreement reached by the two sides in May, prompting the administration to decide to increase pressure on Beijing during a meeting at the White House on Thursday.

Trump said there are no plans to reverse a decision in Osaka that allowed more sales by U.S. suppliers of products that are not sensitive to Chinese telecoms blacklisted giant Huawei Technologies Co .

In a series of tweets announcing the new tariffs, Trump left open for further negotiations. We look forward to continuing the positive dialogue with China on a comprehensive trade agreement and feel that the future between the two countries is uncertain. We will be very bright!

Both China and the U.S. said after talks this week that their negotiators would reconvene in Washington in early September. People close to the administration said they were still planning for talksThis case was conducted.

What Our Economists Say

Assuming Trump's tweet becomes policy, we expect a proportionate response from China. That means more tariffs on imports from the U.S. We don't think China will shoot itself in the foot.by harassment by U.S. companies or U.S. Treasury sales.

Tom Orleansik and Carl Riccadonna, Bloomberg Economics

But they also say the president and his advisers are increasingly wary of what appear to be Chinese efforts to expand talks next year toward a possible regime change after the 2020 presidential election. That feeling, they say, has only grown since Osaka was behind China's failure to deliver on its promise to ramp up agricultural procurement, and the outcome of the Shanghai meeting came to confirm that.

China has insisted that it wants to see all tariffs lifted as part of the deal. But according to a person familiar with the discussions, Chinese negotiators in Shanghai insist that the tariffs will have to be lifted before they can make a move. any reform period, which the United States announced would not commit.

The tariff move has drawn an angry reaction from the U.S. business community, which is pushing Trump to end a trade war that they see increasingly weighing on U.S. and global economies.

The Office of the U.S. Trade Representative said it will release the final, the official list of products to receive higher tariffs in the coming days.

Analysts say the decision to walk away from the ceasefire in Osaka shows the desperation of an administration that is trying to force China to commit to economic reforms that will go nowhere.

Edward Alden, a senior fellow at the Council on Foreign Relations, said China's trade war with Trump has failed and he is doubling down on his failed strategy. Much of the purpose of tariffs is to force China to change the structure of its economy. But tariffs  China is willing to live with the pain instead of making the changes the U.S. wants.

• With the support of Kevin Hamlin, Shawn Donnan, Miao Han, David Wainer, Mike Dorning, Jennifer A Dlouhy, Mark Niquette, Justin Sink, Yinan Zhao, Natalie Lung, Dandan Li, Jenny Leonard, Matt Turner, Brendan Scott, and Haze Fan

~ Bloomberg ~