Donald Trump’s tariff threat pushing China to make final make-or-break choice, analysts say

The US president has threatened to impose 10 per cent tariffs on the remaining US$300 billion in Chinese imports from September 1

Threat came less than 48 hours after the conclusion of a ‘constructive’ round of talks in Shanghai aimed at ending the year-long trade war

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Donald Trump’s latest threat came less than 48 hours after the conclusion of a “constructive” round of talks in Shanghai. Photo: Bloomberg

Published: 11:00pm, 2 Aug 2019Updated: 12:53am, 3 Aug 2019

China is facing a make-or-break choice in the next four weeks after US President Donald Trump threatened to impose 10 per cent tariffs on the remaining US$300 billion in Chinese imports from September 1, analysts said.

One option is for China to concede to Trump by buying farm products from the United States and by agreeing to part of a currently rejected version of a deal to ensure the talks that resumed in Shanghai this week continue and the threatened tariffs do not materialise.

Another option is that Beijing can walk away from the negotiations because Trump’s threat, in eyes of Beijing, goes against the truce agreed with Xi Jinping at the G20 summit in Japan and is a way of placing “maximum pressure” that destroys goodwill and trust.

China could also respond by cancelling orders placed for US farm products, increasing tariffs on US products and accelerating the launch of a unreliable entity list to sanction American firms.

The timing of Trump’s latest threat, which came less than 48 hours after the conclusion of a “constructive” round of talks in Shanghai, might have caught Beijing off guard as China did not immediately announce any specific retaliatory plans.

Foreign Minister Wang Yi said that the tariffs are “not the correct way” to solve trade disputes, while Foreign Ministry spokeswoman Hua Chunying said that China will hit back with “necessary” countermeasures.

China's Ministry of Commerce also said in a statement that China will strike back and warned the US to "bear all possible consequences".