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China vows retaliation if Trump raises tariffs

May 10,2019
Ratcheting up tension ahead of talks in Washington, China vowed Thursday to defend its own interests and retaliate if U.S. President Donald Trump goes ahead with more tariff hikes in a dispute over trade and technology.

Beijing will impose “necessary countermeasures” if the increases take effect Friday as planned, China’s Commerce Ministry said. It gave no details but a ministry spokesman said Beijing has made “all necessary preparations,” suggesting it might be bracing for worsening conflict.

Trump threw global financial markets into turmoil with Sunday’s threat to raise import duties on $200 billion of Chinese goods from 10 percent to 25 percent. Trump complained Beijing was trying to backtrack on earlier agreements.

“If the U.S. tariff measures are carried out, China will have to take necessary countermeasures,” said a Commerce Ministry statement. The spokesman, Gao Feng, said later that Beijing has the “determination and ability to defend its own interests.”

The volley of threats reignited jitters about global economic growth, prompting another round of losses on world stock markets.

If tariff hikes go ahead, “risks of a financial market collapse, extreme risk aversion, and sharp slowdown in global growth will spike,” said Philip Wee of DBS Group in a report.

Before this week’s acrimony, both sides said negotiations were making progress, which helped to stabilize financial markets. But economists warned a deal might be further away than investors hoped.

Trump raised duties on $250 billion of Chinese imports starting in July over complaints Beijing steals or pressures companies to hand over technology. That includes a 25 percent charge on $50 billion of goods and 10 percent on $200 billion.

Washington is pressing Beijing to roll back plans for government-led creation of Chinese global competitors in robotics, electric cars and other technologies. The United States, Europe, Japan and other trading partners say those violate Beijing’s market-opening commitments.

Beijing responded with penalties on $110 billion of American imports, but is running out of goods for tariff hikes due to the lopsided trade balance.

China’s economy czar, Vice Premier Liu He, was leaving Thursday for Washington, according to Gao, the government spokesman.

Chinese exports to the United States plunged 13 percent from a year ago in April and are off 9.7 percent since the start of 2019. Total Chinese exports sank 2.7 percent in April, well below forecasts of growth in low single digits.

Imports of American goods tumbled 26 percent.


AP