China denounces Trump blackmail
• Fed-up China vows to retaliate as ZTE and other Asian stocks fall amid escalating war of words between nations
Beijing has accused Donald Trump of “blackmail” and warned it would retaliate in kind after the US president threatened to impose fresh tariffs on goods.
Beijing has accused Donald Trump of “blackmail” and warned it would retaliate in kind after the US president threatened to impose fresh tariffs on Chinese goods, pushing the world’s two biggest economies closer to a trade war.
Trump said on Monday he had asked the US trade representative to target $200bn worth of imports for a 10% levy, citing China’s “unacceptable” move to raise its own tariffs.
He added he would identify an extra $200bn of goods — for a possible total of $450bn, or most Chinese imports — “if China increases its tariffs yet again”.
Trump said that “further action must be taken to encourage China to change its unfair practices, open its market to US goods and accept a more balanced trade relationship with the US”.
Last week, he announced 25% tariffs on $50bn in Chinese imports, prompting Beijing to retaliate with matching duties on US goods. The US leader warned on Friday of “additional tariffs” should Beijing hit back with tit-for-tat measures.
“The trade relationship between the US and China must be much more equitable,” he said in explaining his latest decision. “I have an excellent relationship with President Xi [Jinping], and we will continue working together on many issues. But the US will no longer be taken advantage of on trade by China and other countries in the world,” he said.
China’s commerce ministry immediately responded by saying the US “practice of extreme pressure and blackmail departed from the consensus reached by both sides during multiple negotiations and has also greatly disappointed international society”. It said if the US “acts irrationally and issues a list, China will have no choice but to take comprehensive measures of a corresponding number and quality and take strong, powerful countermeasures”.
The news hit stock markets in Asia, with Shanghai down almost 4% and Shenzhen tumbling nearly 6%, while Hong Kong fell more than 2%.
Leading the fall in Hong Kong was Chinese telecom giant ZTE, plunging nearly 26% and shedding nearly two-thirds of its value since striking a deal with the Trump administration to lift a ban on using critical US components. But on Monday, the US Senate defied Trump by voting to overrule his administration’s deal with legislation to reimpose the ban on hi-tech chip sales to the company, whose fate has figured prominently in the trade talks.
Trump is moving forward with the trade measures after months of sometimes fraught shuttle diplomacy in which Chinese offers to purchase more American goods failed to assuage his grievances over a widening trade imbalance and China’s aggressive industrial development policies.
China had offered to ramp up purchases of American goods by $70bn to help cut its yawning trade surplus with the US, whereas Trump had demanded a $200bn deficit cut.
“Disregarding the consensus reached by the two countries, the US is playing fast and loose and once again stirring up a trade war,” said Geng Shuang, the spokesman for China’s foreign ministry.
“This way of doing things breaks faith with everyone.”
The China trade offensive is only one side of Trump’s multifront battle with the US’s economic partners as he presses ahead with his protectionist “America First” agenda.
Since June 1, steel and aluminium imports from the EU, Canada and Mexico have been hit with tariffs of 25% and 10%, respectively. “This latest action by China clearly indicates its determination to keep the US at a permanent and unfair disadvantage, which is reflected in our massive $376bn trade imbalance in goods,” Trump said of China’s retaliatory tariffs. “This is unacceptable.”