WASHINGTON/BEIJING (REUTERS) - United States President Donald Trump said on Monday (May 13) that he would meet Chinese President Xi Jinping next month as the trade war between the world's two largest economies intensified, sending shivers through global markets.
Earlier, China announced it would impose higher tariffs on a range of US goods including frozen vegetables and liquefied natural gas, a move that followed Washington's decision last week to hike its own levies on US$200 billion (S$274 billion) in Chinese imports.
The US Trade Representative's office later said it planned to hold a public hearing next month on the possibility of raising duties of up to 25 per cent on a further US$300 billion worth of imports from China. Mobile phones and laptops would be included in that list, but pharmaceuticals would be excluded, the office said.
The prospect that the US and China were spiralling into a no-holds-barred dispute that could derail the global economy has rattled investors and led to a sharp sell-off on equities in the past week.
A gauge of global stocks shed a further 1.9 per cent on Monday, its biggest one-day drop in more than five months. China's yuan currency fell to its lowest level since December and oil futures slumped.
Mr Trump, who has embraced protectionism as part of an "America First" agenda, said he would talk to Mr Xi at a Group of 20 summit in late June.
"Maybe something will happen," Mr Trump said in remarks at the White House. "We're going to be meeting, as you know, at the G-20 in Japan and that'll be, I think, probably a very fruitful meeting."
Expressing optimism about resolving the trade dispute, the US leader later said: "We'll let you know in about three or four weeks whether or not it was successful. ... But I have a feeling it's going to be very successful."
Speaking in Russia on Monday, in comments relayed by China's Foreign Ministry on Tuesday, the Chinese government's top diplomat Wang Yi also struck an upbeat tone, noting the talks had made important and substantive progress, as well as facing problems.
While noting that "buckpassing" and pressure were counterproductive and would only invite retaliation, the State Councillor added that there was still hope to resolve the issue in a friendly way.
"We believe that as long as these negotiations are in line with China's general direction of reform and opening up, in line with China's fundamental need for high-quality development, and in line with the common and long-term interests of the Chinese and American peoples, both countries' negotiating teams have the ability and wisdom to resolve each other's reasonable demands, and in the end reach a mutually beneficial, win-win agreement," said Mr Wang.
Talks are not a one-way street and should be based on equality, he said.
"When negotiating with any country, China must uphold the sovereignty of the country, safeguard the interests of the people, and safeguard the dignity of the people. These principles and bottom lines we have stuck to in the past, and we still have to today."
US farmers are among those most hurt by the trade war, with soybean sales to China plummeting and US soybean futures hitting their lowest level in a decade. Mr Trump said on Monday that his administration was planning to provide about US$15 billion to help farmers whose products might be targeted.
Farmers, who are a core political constituency for Mr Trump's Republicans heading into the 2020 presidential and congressional elections, are growing increasingly frustrated with the protracted trade talks and the failure to reach an agreement.
"What that means for soya bean growers is that we're losing," Mr Davie Stephens, president of the American Soybean Association, said in a statement.
STEADY DRUM BEAT
China said on Monday that it plans to set import tariffs ranging from 5 per cent to 25 per cent on 5,140 US products on a US$60 billion target list. It said the tariffs will take effect on June 1.
"China's adjustment on additional tariffs is a response to US unilateralism and protectionism," its Finance Ministry said. "China hopes the US will get back to the right track of bilateral trade and economic consultations and meet with China halfway."
In the middle of the negotiations last week, Mr Trump hiked tariffs on US$200 billion of Chinese goods to 25 per cent from 10 per cent. The move affected 5,700 categories of Chinese products, including Internet modems and routers.
Sources have said talks stalled after China tried to delete commitments from a draft agreement that its laws would be changed to enact new policies on issues from intellectual property protection to forced technology transfers.
Beijing said on Monday it would "never surrender" to external pressure, and its state media kept up a steady drum beat of strongly worded commentary, reiterating that the door to talks was always open, but vowing that China would defend its national interests and dignity.
In a commentary, state television said the effect of the US tariffs on the Chinese economy was "totally controllable".
Mr Trump has said he is in "no rush" to finalise a deal with China. He again defended the move to hike US tariffs and said there was no reason why American consumers would pay the costs.
Economists and industry consultants, however, maintain that it is US businesses that will pay the costs and likely pass them on to consumers.
US tariffs last year triggered retaliation by China, which imposed 25 per cent levies on US$50 billion worth of US products including soybeans, beef and pork and lower tariffs on a list of US$60 billion in goods.
In a research note, Goldman Sachs economists said new evidence showed the costs of Washington's tariffs on China last year had fallen entirely on US businesses and households, with no clear reduction in prices charged by Chinese exporters.
They added that the effects of the tariffs had spilled over noticeably to the prices charged by US producers competing with goods affected by the levies.