China’s Foreign Ministry on Friday threatened to retaliate after U.S. President Donald Trump announced a new round of trade tariffs that, if implemented, would extend taxes to all Chinese goods coming into the U.S.
Trump had said on Thursday that he would hike tariffs on some 300 billion dollars’ worth of Chinese goods to 10 per cent starting Sept. 1.
That is on top of the 25-per-cent tariffs already imposed over the past year on 250 billion dollars’ worth of Chinese products.
The U.S. announcement, which was not widely expected, sent stocks tumbling across the globe. Japan’s benchmark Nikkei 225 Stock Average lost 2.11 per cent by market close on Friday while Hong Kong’s Hang Seng Index plunged 2.35 per cent.
The Shanghai Composite Index dropped 1.41 per cent and China’s CSI 300 Index declined 1.47 per cent, while European stocks were also down Friday morning.
The S&P 500 index in the US closed down nearly 1 per cent on Thursday.
“We hope the U.S. will recognise the situation, abandon its illusions, correct its mistakes and return to the correct track of solving problems,” Foreign Ministry spokeswoman Hua Chunying told reporters.
If the tariffs are implemented, “China will have to take necessary countermeasures to resolutely defend” its interests, she added.
The ministry did not say what measures would be taken but they could likely take the form of retaliatory tariffs or the blacklisting of U.S. companies.
Trump’s announcement followed talks between the world’s two largest economies in Shanghai this week, the first time negotiators met since the president and his Chinese counterpart Xi Jinping agreed at the G20 in late June to pause further measures and return to the table.
That pause was short-lived. Speaking to reporters, Trump said the new tariffs could go “beyond 25 per cent,” though he was not currently planning to do so.
He stressed that the Sept. 1 deadline was fixed and not a negotiating ploy.
“If they don’t want to trade with us, that’s fine with me. It would save a lot of money,” Trump said outside the White House, as he was set to depart for a campaign rally.
He also accused China of devaluing its currency.
Trump insisted he had no intention of cancelling future rounds of trade talks, saying he looked forward to “positive dialogue” with China.
But the Chinese Foreign Ministry’s spokeswoman called it a serious breach of the G20 agreement to restart talks and warned that further tariffs would have a negative impact on the global economy.
Chinese Foreign Minister Wang Yi, speaking to reporters on the sidelines of an ASEAN summit in Bangkok on Friday, said the fresh tariffs were “definitely not a constructive measure to solve economic and trade friction.”
In announcing the new tariffs, Trump said China had retreated from its pledge to increase purchases of U.S. agricultural products and reneged on a promise to stop the sale of Fentanyl, a synthetic opioid, to the U.S.
The comments were an admission that key concessions touted by Trump had failed to materialize, and the announcement further indicated the trade war was not abating.
“Until such time as there is a deal, we’ll be taxing them,” the president said, adding that he was not concerned by a decline on U.S. markets after his latest tariff announcement.
At a rally in Ohio on Thursday evening, Trump also said he believed China wanted to draw out the talks, hoping he would not win re-election in 2020.
“They are praying. They would like to see a new president in a year-and-a-half so they can continue to rip off the U.S. like they have been doing for the last 25 years,” he told a cheering crowd.
The tariff announcement came one day after the U.S. Federal Reserve cut interest rates, citing a global slowdown and the uncertainties of the trade war, in particular the tariffs.
Trump has been agitating for lower interest rates and, while the Federal Reserve had suggested that it would stop at one rate cut, speculation immediately mounted that the central bank may be forced to lower rates further to counteract the new tariffs.
Farmers, a key group in Trump’s base of supporters, have been taking hits in the trade war.
The president unleashed a 16-billion-dollar aid plan for the agricultural sector earlier this year, coming on top of a 12-billion-dollar plan the previous year.
China is also believed to be taking steps to bolster its own economy, which has shown signs of slowing.
Trump has railed against China’s alleged unfair trade practices, including blocking market access, and problems of intellectual property theft.
He alleged the sides were close to concluding a comprehensive trade deal three months ago, but China pulled back at the last moment.
Broadcaster CNBC reported that Trump made the latest announcement after receiving a briefing from the delegation to the Shanghai talks, which was led by U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin.