New tariffs on China take effect today

Gladys Abbott
September 25, 2018

"The door for trade talks is always open but negotiations must be held in an environment of mutual respect", but "cannot be carried out under the threat of tariffs", a state-run Xinhua news agency quoted a statement from its government.

The response, which came just over an hour after the USA imposed new duties on US$200 billion in Chinese goods on Monday, underscores a deepening gulf between both governments in a dispute that observers say is less about a row over a bilateral goods deficit and increasingly about a USA desire to put the brakes on China's economic ascent.

"Now that the United States has adopted such a huge trade restriction measure. how can the negotiations proceed?"

Wang said that not all trade discussions had been useless, but accused the U.S. of abandoning its mutual understanding with China. The Trump administration has also called on China to allow US companies greater access to Chinese markets and to cut its USA trade surplus.

Defiant in the face of increasing fears about the impact to the U.S. economy, Trump has threatened to hit all imports from China if it refuses to change policies he says harm United States industry, particularly the theft of American technology.

"If this continues, it will destroy in an instant the gains of the last four decades of China-U.S. relations", Wang told members of the U.S. That would cover almost everything China sells to the United States.

China has pulled out of trade talks with the U.S. in response and attacked the Trump administration's "trade bullyism" in a white paper.

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The United States and China imposed fresh tariffs on each other's goods on Monday as the world's biggest economies showed no signs of backing down from an increasingly bitter trade dispute that is expected to knock global economic growth.

The trade tensions have also cast a pall over broader relations between Beijing and Washington, with the two sides butting heads on a growing number of issues.

"The sharp criticism (from Beijing on Monday) suggests that China might prefer to wait out the current US administration, rather than embarking on potentially futile negotiations", Mizuho Bank said in a note to clients. China responded with similar tariffs, but only targeted $60 billion worth of US goods in exchange.

China on Saturday called off planned trade talks with U.S. officials with a move by the U.S. State Department to sanction China's defense agency and its director on Thursday contributing to the decision, according to people familiar with the situation. He was apparently referring to talks in May, when it appeared that the two sides had sorted out a framework before the White House backed away.

But he said the government is working to accommodate their needs and reduce their tax burdens.

"While these actions seem to be already priced in, investors are becoming increasingly anxious that the trade war may enter phase III", Hussein Sayed, the chief market strategist at trading platform FXTM, said in an email on Monday morning.

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