US hikes tariffs on Chinese goods, China says to strike back

US-China trade war
US President Donald Trump. (Photo, Courtesy)
US President Donald Trump’s tariff increase to 25 per cent on over Sh20 trillion (USD200 billion) worth of Chinese goods took effect on Friday, and Beijing said it would strike back, ratcheting up tensions as the two sides pursue last-ditch talks to try salvaging a trade deal.

China’s Commerce Ministry said it “deeply regrets” the U.S. decision, adding that it would take necessary countermeasures, without elaborating.

The hike comes in the midst of two days of talks between top U.S. and Chinese negotiators to try to rescue a faltering deal aimed at ending a 10-month trade war between the world’s two largest economies.

Chinese Vice Premier Liu He, U.S. Trade Representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin talked for 90 minutes on Thursday and were expected to resume talks on Friday.

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The Commerce Ministry said that negotiations were continuing, and that it “hopes the United States can meet China halfway, make joint efforts, and resolve the issue through cooperation and consultation”.

With no action from the Trump administration to reverse the increase as negotiations moved into a second day, U.S. Customs and Border Protection imposed the new 25 per cent duty on affected US-bound cargoes leaving China after 12:01 a.m. EDT (0401 GMT) on Friday.

Goods in the more than 5,700 affected product categories that left Chinese ports and airports before midnight will be subject to the original 10 per cent duty rate, a CBP spokeswoman said.

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The grace period was not applied to three previous rounds of tariffs imposed last year on Chinese goods, which had much longer notice periods of at least three weeks before the duties took effect.

“This creates an unofficial window, potentially lasting a couple of weeks, in which negotiations can continue and generates a ‘soft’ deadline to reach a deal,” investment bank Goldman Sachs wrote in a note.

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“Given this detail, downside to sentiment might be slightly more muted than if the tariff increase came with a ‘hard’ deadline. This also leaves an opportunity for the two sides to reach an agreement in the next couple of weeks, though challenges remain.”

Trump gave U.S. importers less than five days notice about his decision to increase the rate on the over Sh20 trillion (USD200 billion) category of goods to 25 per cent, which now matches the rate on a prior Sh5 trillion (USD50 billion) category of Chinese machinery and technology goods.

US stock futures fell and Asian shares pared gains after the U.S. tariff hike, with investors worried that a protracted trade war could hamper global economic growth.

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