Donald Trump’s latest tariffs risk destroying trade between China and the US, warns Beijing

China issues warning as it vows to retaliate after Washington slaps further tariffs on US$200 billion worth of goods

PUBLISHED : Wednesday, 11 July, 2018, 3:22pm
UPDATED : Wednesday, 11 July, 2018, 11:40pm

China has promised to retaliate to the latest US tariffs, but warned that the escalating confrontation risks “destroying” trade between the two sides.

The US Trade Representative Office said on Tuesday that it was starting a process to levy 10 per cent of tariffs on US$200 billion worth of Chinese products.

The final list – covering a wide range of products including refrigerators, furniture and even antiques – will be announced after public hearings in late August.

The announcement was a response to China’s decision to impose 25 per cent tariffs on US$34 billion of American goods last Friday in response to a similar US levy.

China’s Ministry of Commerce vowed to hit back at the latest tariffs on Wednesday, saying that it was “absolutely unacceptable” that the US was escalating the situation.

“China is shocked by the US move and the Chinese government, as always, will have to react to defend the core interests of our nation and people,” it said, adding it will make an additional complaint to the World Trade Organisation.

Li Chenggang, assistant minister of commerce, told a forum in Beijing on Wednesday that large-scale tit-for-tat tariffs would “inevitably destroy” China-US trade, and America’s actions would “damage the global economic order”.

Trade negotiations in the previous months have failed and the trade war officially started last week when the two countries imposed 25 per cent of each other’s products worth of US$34 billion. The second batch of US$16 billion worth of sanctions is expected to take effect in two weeks.

Chinese diplomatic and trade observers said Beijing was hoping for a “truce” in the trade war, but Donald Trump’s tariffs have derailed negotiation efforts.

Concerns over US-China trade conflict loom large at Asia’s largest hi-tech conference

Local media in the eastern city of Suzhou reported that in April the former commerce minister Chen Deming had warned local business leaders to start looking for new markets rather than focusing on America.

He Weiwen, a former economic and commercial counsellor at the Chinese consulate in New York and San Francisco, said companies said at the time of Chen’s visit that the US tariffs would hurt exporters and firms may consider moving their production from China to Southeast Asian countries.

He said China should consider “quality and quantitative” measures, such as delaying the implementation of business deals agreed during Trump’s trip to Beijing in November to push the US back to the negotiating table.

He also said China should be ready for the outbreak of a full-blown trade war, warning that a deal would only be reached after several rounds of trade sanctions and negotiations. But he argued that the Chinese government “must hit back forcefully” to defend itself.

China can turn to South America for its soybeans, industry chief says

Observers have predicted that US companies operating in China will be caught in the crossfire and may face delays in getting approval for takeovers and investments. However, this would risk undermining China’s attempts to portray itself as the victim in the dispute.

Watch: ‘Biggest trade war in economic history’ begins between US and China

Shi Yinhong, a professor of international relations at Renmin University in Beijing, said countermeasures could also hurt China and prompt further retaliation by Trump.

But Shi added: “China has to fight back. So far, there is no hope of ending the trade war.

“The trade war has just begun. Both countries are testing each other.”