China plans to take "necessary countermeasures" in response to the US' decision to increase tariffs to 25 percent on $200 billion in Chinese goods, a decision China's Commerce Ministry said it "deeply regrets".
Trump on Thursday took aim at the $325 billion in Chinese goods that are so far untouched by the trade war, saying he was "starting. paperwork today" to tax those with a punitive tariff of 25 percent.
President Donald Trump's latest tariff hikes on Chinese goods took effect Friday.
According to US government and private sector sources, China was already planning on backtracking on some important commitments it had previously made to the USA government before arriving for the new trade negotiations with the USA government.
Talks are scheduled to resume Friday morning, the White House said.
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Based on US Census Bureau trade data for a year ago, China would only have about US$10 billion in US imports left to levy in retaliation for any future US tariffs, including crude oil and large aircraft. Only when those shipments complete the three- to four-week voyage across the Pacific to the US would they face the 25% tariff.
Later in the day, the Chinese Vice Premier held meetings with the US Trade Representatives Robert Lighthizer. "Just in the last three days of trading, we've seen the price reduction that equates to about a $50,000 loss for us", he added.
Ratcheting up tension ahead of talks in Washington, China vowed to defend its own interests and retaliate if Trump goes ahead with more tariff hikes. The White House statement said they also had a working dinner with Liu, who is leading the Chinese side.
On Thursday, Mr. Trump said he received a "beautiful letter" from Chinese President Xi Jinping, but again criticized Beijing officials for attempting to "renegotiate" a tentative agreement. "I can't think of any structure in law or diplomacy that can enforce that", said James McGregor, chairman for Greater China at the government relations firm APCO Worldwide.
"The Chinese side deeply regrets that if the United States tariff measures are implemented, China will have to take necessary countermeasures".
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Perhaps alluding to the United States' criticisms of China's intellectual property theft and ongoing negotiations that have sought to pin down an enforcement mechanism to ensure the Chinese regime curbs such theft, the editorial chastised the administration for "suppressing China's science and technology innovation".
If tariff hikes go ahead, "risks of a financial market collapse, extreme risk aversion, and sharp slowdown in global growth will spike", said Philip Wee of DBS Group in a report. But regulators are running out of U.S. goods for penalties due to their lopsided trade balance.
"What the market fears deep down is an all-out trade war with no hope for resolution", said Tim Ghriskey, chief investment strategist at Inverness Counsel in NY.
The Standard & Poor's 500 index retreated 1.4 percent and the Nasdaq Composite was 1.8 percent in the red in midmorning trading.
Chinese policy makers could devalue the yuan to offset the impact of US duties on China's economy. "There is the potential for a 15%-plus correction in Chinese and emerging market (EM) stocks, and around 5-7% falls in global equities, in our opinion", said analysts at Lombard Odier Investment Managers in a note.
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Trump's levies on shipments from China have so far barely been a blip for the US economy, trimming growth by an estimated tenth of a percentage point for all of 2019, according to Oxford Economics. Tokyo's Nikkei 225 lost 0.9%.