China has warned that the United States threatens to wreck the global economy after Washington escalated the trade war on Tuesday night. Proposed tariffs on another US$200 billion of Chinese imports have been rolled out with Beijing vowing to retaliate.
This latest move in the ballooning trade conflict between the world’s two leading economies came just days after tit-for-tat duties on goods worth $34 billion took effect with the shock waves rippling across Asian markets.
Analysts have warned that spiraling tensions between the two countries could have a damaging impact on the global economy.
“For over a year, the Trump administration has patiently urged China to stop its unfair practices, open its market, and engage in true market competition,” US Trade Representative Robert Lighthizer said in announcing the proposed tariffs.
“Rather than address our legitimate concerns, China has begun to retaliate against US products … There is no justification for such action,” he said in a statement.
President Donald Trump has therefore ordered the trade department to “begin the process of imposing tariffs of 10% on an additional $200 billion of Chinese imports,” Lighthizer pointed out.
Officials later issued a list of thousands of Chinese products the White House wants to hit with new tariffs, including hundreds of food products as well as tobacco, chemicals and coal.
It also includes consumer goods ranging from car tires, furniture, wood products, handbags and suitcases, to dog and cat food, baseball gloves, bicycles, golf bags, toilet paper and beauty products.
Reacting to the “totally unacceptable” decision by Washington, China’s Ministry of Commerce in Beijing made it clear the world’s second-largest economy would be forced to take “countermeasures.”
“The behavior of the US is hurting China, hurting the world, and hurting itself,” the ministry said in a statement, adding that it was “shocked” by US actions.
“In order to safeguard the core interests of the country and the fundamental interests of the people, the Chinese government as always will have no choice but to take the necessary countermeasures,” it said in a statement.
President Xi Jinping’s government is also planning to take action against Washington’s “unilateralist” behavior at the World Trade Organization in Geneva.
At a forum in Beijing, a senior official accused the US of “damaging the world economic order” and said it would “destroy” trade between the rival powers.
“The outburst of large-scale mutual levying of tariffs between China and the United States will inevitably destroy Sino-US trade,” Li Chenggang, the assistant minister of commerce, said.
Concerns of the dispute spinning out of control hit Asia markets. In Shanghai, the main index fell 1.78% to close at 2,777.20 points, while the smaller Shenzhen index tumbled 1.96%.
Hong Kong’s Hang Seng also suffered a bout of the jitters, falling 1.29% to finish the day on 28,311.69 points.
Elsewhere, Japan’s Nikkei 225 dropped 1.19% to close at 21,932.21 as trade-sensitive stocks, such as car manufacturers went into reverse gear. In South Korea, the KOPSI edged down by 0.59%.
“The problem is, we don’t know where this is going in the future,” Erik Norland, senior economist at CME Group, told CNBC. “That could hit business investment, it could hit employment creation and it could damage confidence as we’re seeing in the financial markets.”