BEIJING - China is gearing up to hit back at the United States after President Donald Trump, in a surprise announcement overnight, said he will impose new tariffs in a bid to pressure its trade rival.
In a strongly-worded statement on Friday (Aug 2), a Chinese Commerce Ministry spokesman said the move was a “serious violation” of the consensus reached between the two countries’ leaders on the sidelines of the G20 meeting in June.
If the US introduces the new taxes, Beijing will have to take counter-measures “to resolutely defend the core interests of the country and the fundamental interests of the people”, said the statement.
It did not say what these counter-measures would be.
President Trump’s overnight announcement of new 10 per cent tariffs on the remaining US$300 billion (S$413 billion) in Chinese imports sent markets into a tailspin and American businesses and retail associations complaining of impending higher prices.
The renminbi also fell to its lowest this year - 6.950 to the dollar - but recovered slightly by midday on Friday.
In a string of tweets, the American president had accused Beijing of not following through on its promise to buy more American agricultural products and stop the sale of fentanyl to the US.
“We look forward to continuing our positive dialogue with China on a comprehensive Trade Deal, and feel that the future between our two countries will be a very bright one!” he tweeted.
These new duties, which will kick in on Sep 1, will hit a range of consumer goods, from mobile phones to clothing.
Mr Trump’s surprise move came after US and China negotiators earlier this week finished what both sides had described as “constructive” talks in Shanghai, which had resumed after a three-month break.
Another meeting was scheduled next month (September) in Washington.
The heightened tensions spilled over to Bangkok on Friday at an Asean meeting when US Secretary of State Mike Pompeo backed his president’s move, blaming China for “decades of bad behaviour” that have undermined fair trade and competition.
Chinese foreign minister Wang Yi who was also attending the meeting, told reporters: “Imposing tariffs is definitely not the right way to resolve trade frictions.”
Talks fell apart in May after the US accused China of walking back on its commitments, while Beijing said Washington kept changing its demands and refused to remove existing tariffs. American negotiators also wanted China to change its laws and agree to an enforcement mechanism to ensure it kept to its word.
Mr Trump had previously dangled the threat of taxing the remaining Chinese goods. The US has already imposed 25 per cent tariffs on US$250 billion worth of Chinese imports.
While Mr Trump seems intent on intensifying pressure on China over the trade talks, observers believe it will have the opposite effect.
Mr Hu Xijin, editor-in-chief of nationalistic tabloid Global Times, tweeted that the new tariffs put the prospect of a trade deal even further from reach.
“I think the Chinese will no longer give priority to controlling trade war scale, they will focus on the national strategy under a prolonged trade war,” he said.
Mr Nelson Dong, senior partner at international law firm Dorsey and Whitney, said it was already difficult enough for negotiators to find common ground given the complex structural issues involved in the dispute, “but pushing the other side into a corner where any meaningful concession then appears to be ‘weakness’ or ‘vulnerability’ because of such an overt threat posture typically reduces the likelihood of a positive outcome”.
“Each side has to consider how its reaction to such public pressure will be perceived by the international community and, even more importantly, by domestic constituencies,” he said.
China has, since the talks in May collapsed, toughened its stance and prepared its citizens for a “people’s war”.
A retaliation could come in the form of tariffs, a ban on the export of rare earths, and a blacklist of American firms.
So far, it has only introduced tit-for-tat tariffs of up to 25 per cent on US$100 billion of American products.