TRADE WAR TO ESCALATE?

US prepares new tariffs ahead of Trump’s meeting with Xi at G20 summit next month

THE United States prepared to hit China with new tariffs even as President Donald Trump said he’ll meet his Chinese counterpart, Xi Jinping, at next month’s G20 summit, an encounter that could prove pivotal in a deepening clash over trade.

The US Trade Representative’s office on Monday released a list of about US$300 billion (RM1.25 trillion) worth of Chinese goods, including children’s clothing, toys, mobile phones and laptops that Trump has threatened to hit with a 25 per cent tariff.

If Trump proceeds with the tariffs, it would see almost all imports from China covered by

punitive import duties. It also would turn the president’s trade wars into a tangible reality for many Americans as he seeks reelection.

At the same time, Trump is sounding optimistic about the chances of a deal.

On Monday, Trump said it would become apparent “in about three or four weeks” whether trade talks with China were going to be successful.

“You never really know, right?” said Trump at an Iftar dinner at the White House. “But I have a feeling it’s going to be very successful.”

Under a process outlined by US officials, the new tariffs would not take effect until late June at the earliest. But that could come just as Trump meets with Xi on the sidelines of a Group of 20 leaders meeting on June 28-29 in Osaka, Japan, raising the stakes in an already escalating trade war.

On Monday, Trump warned China not to go too far in responding to US trade actions after China rolled out its retaliation to his move to hike import duties on a separate US$200 billion tranche of imports from China last week.

“There can be some retaliation, but it can’t be very substantial,” said Trump at the White House during a meeting with Hungarian Prime Minister Viktor Orban.

The global stock slide moderated yesterday as investors retained bets that the US and China will ultimately reach a trade deal. US and European futures rose, and Asian equities fell by less than the magnitude seen on Wall Street overnight.

China announced on Monday its plans to raise duties on some US$60 billion in American imports starting June 1, defying a call from Trump to resist escalating the trade war.

Less than two hours after Trump tweeted a warning that “China should not retaliate — will only get worse!” the Ministry of Finance in Beijing unveiled the measures on its website.

The new rate of 25 per cent would apply to 2,493 US products, with other goods subject to duties ranging from five to 20 per cent, it said.