The latest escalation in the trade war between the world's two biggest economies came shortly after Donald Trump tweeted a warning to China not to retaliate against the extra tariffs he imposed last week on imports to the US.
Trade tensions between the United States and China escalated today, as the Dow Jones Industrial Average fell by over 700 points after China said it would raise tariffs on $60billion worth of U.S. goods, starting June 1.
The President has sought to spin his decision to increase tariffs on United States imports from China as delivering pain to China and benefits to the U.S., repeatedly suggesting - falsely - that China would pay for the USA tariff increase.
Earlier in the day, Chinese Foreign Ministry spokesman Geng Shuang warned that his country "would never surrender to external pressure".
The Trump administration last week announced that it will raise tariffs on $200 billion worth of Chinese imports from 10% to 25%.
But its troubles were amplified by a broad-based sell-off in big US technology stocks, which have been hammered by the threat of fresh tariffs in an increasingly bitter US-China trade war.
One of the unspoken taboos regarding this trade war is that while there are sectors in both the USA and China that have needlessly suffered under the pressure of tariffs, both the Chinese and US economies have enjoyed growth that has exceeded forecasts. He said officials might be anxious companies may shift operations out of China in response to "aggressive retaliatory actions".
If Trump proceeds with the tariffs, it would see nearly all imports from China covered by punitive import duties. Trump said last month that he would end preferential trade treatment for India, which would result in U.S. tariffs on up to $5.6 billion of imports from India. Instead, officials on both sides signaled that differences between the two sides would ultimately need to be resolved in direct talks between Trump and Xi.
In the short term, the USA insistence on a protectionist mentality will highlight the importance of the Belt and Road Initiative (BRI) to Asian, Latin American and African countries.
The president said Monday that that's not inevitable.
But Beijing also appeared to dig in.
The trade war escalated on Friday after Trump hiked tariffs on $200 billion worth of Chinese goods, saying China had reneged on earlier commitments made during months of trade negotiations.
Trump had warned Beijing not to retaliate.
American farmers, a key constituency of Trump, have been among the hardest hit in the trade war.
Last week, the Illinois Farm Bureau voiced concern about the effect of renewed tensions between the US and China.
Beijing's retaliation on about US$60 billion of USA goods includes extra tariffs of as much as 25 per cent on goods ranging from small aircraft, computers, and textiles to chemicals, meat, wheat, wine and LNG.
A stumbling block has been US insistence on an enforcement mechanism with penalties to ensure Beijing carries out its commitments.
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