China vows retaliation for latest $200bn US tariff threat

China and the United States face a wider trade war after Beijing vowed on Wednesday to retaliate over Washington’s threat to impose $200bn in additional tariffs on Chinese goods.

China’s Commerce Ministry slammed the latest US threat as a “totally unacceptable” escalation of their dispute and promised to protect its “core interests”.

“To protect the core interests of the nation and its people, the Chinese government will be forced to impose necessary countermeasures.”

Beijing gave no details of the possible retaliation but earlier it threatened “comprehensive measures”, which prompted fears it might go beyond matching Washington’s duty increases by disrupting operations for US companies in China.

The additional tariffs could affect as much as $468bn in trade between the two countries, with the possibility of ever more expansive levies that US President Donald Trump threatened to impose on China.    

The spiralling conflict over US complaints about Chinese technology policy has prompted warnings it might chill global economic growth.

Washington has accused Beijing of stealing US technological innovations or pressuring companies to hand them over and worries that plans for state-led development of Chinese champions in robotics and other fields might erode American industrial leadership.

On Tuesday, the US Trade Representative’s office announced a $200bn list of Chinese goods for possible 10 percent tariffs including fish, apples and burglar alarms.

The US said that was in response to Beijing’s failure to change its policies and to retaliate for last week’s US tariff hike by increasing its own duties on American goods.

US trade deficit

US Trade Representative Robert Lighthizer said China’s retaliatory tariffs were “without any international legal basis or justification”.

On Friday, Washington had imposed 25 percent tariffs on $34bn worth of Chinese imports, prompting Beijing to immediately respond with proportionate tariffs on $34bn in American goods, including seafood and soybeans.

US officials will hold hearings in late August on the list of targeted products. An administration official said it would take about two months to finalise, at which point Trump would decide whether to go ahead with the levies.

The eventual goal is to impose tariffs on 40 percent of Chinese imports, the same proportion of US goods hit by Beijing’s retaliation, an official told reporters.

If the measures are imposed, it would mean new taxes on thousands of products from fish to chemicals, metals and tires.

Trump has said continuously that China has taken advantage of the US economy, and he has vowed to hit nearly all the country’s products with tariffs, as much as $450bn.

The US trade deficit in goods with China ballooned to a record $375.2bn last year, stoking Trump’s anger.

The dispute between China and the US comes on top of Washington’s confrontation with other allies and major trading partners including Canada, Mexico and the European Union, after it imposed steep tariffs on their steel and aluminium. Those nations have also retaliated.