Trump allies dismiss China's olive branch as trade war fears spiral

U.S. President Donald Trump and Chinese President Xi Jinping

U.S. President Donald Trump and Chinese President Xi Jinping

On Tuesday, Chinese officials responded to the president's latest move by following through on an earlier threat to impose tariffs on $60 billion in American goods - almost everything China buys from the United States.

"China has openly stated that they are actively trying to impact and change our election by attacking our farmers, ranchers and industrial workers due to their loyalty to me", Trump tweeted. Hopefully, this trade situation will be resolved, in the end, by myself and President Xi of China, for whom I have great respect and affection.

Men work on placing a steel switch track section of a rail line connecting Sichuan and Tibet, in Shannan Prefecture, Tibet Autonomous Region, China September 16, 2018.

China will not stoop to competitive devaluation of its currency, Premier Li Keqiang stressed, hours after China hit back, with a softer punch than the one landed by the United States, in an escalating tariff war between the world's largest economies.

"Trade wars are not good and they are not easy to win, and this escalation is of course very unfortunate", European Trade Commissioner Cecilia Malmstrom told reporters, echoing one of Trump's catch phrases that trade wars were easy to win.

Trump threatened Monday to add a further $267 billion in Chinese imports to the target list if China retaliates for the latest US duties.

Unlike the first two rounds of tariffs totaling $50 billion, the new taxes launched by Trump would more directly hit American consumers.

Trump warned on Monday that if China takes retaliatory action against USA farmers or industries, "we will immediately pursue phase three, which is tariffs on approximately $267 billion of additional imports".

Now, Trump has made his biggest move yet, announcing 10 percent tariffs starting in a week on $200 billion a year of Chinese goods.

The rate of the new tariffs will be raised to 25% by the end of 2018, the USA administration has said.

"China has had many opportunities to fully address our concerns", Trump said in a statement. If the Chinese economy slows under the weight of USA import taxes, the global economy might also stumble, according to Stephanie Segal, deputy director of the Center for Strategic and worldwide and Studies, a Washington think tank.

The Finance Ministry said its tariff increases are aimed at curbing "trade friction" and the "unilateralism and protectionism of the United States".

The Trump administration's duties on $200 billion spared smartwatches and Bluetooth devices, bicycle helmets, high chairs, children's vehicle seats and playpens.

There was no word on whether China would back out of trade talks it said it was invited to by the USA, but a Chinese Commerce Ministry statement said the United States increase "brings new uncertainty to the consultations".

He continued: "Deeply integrated into the world economy, the Chinese economy is inevitably affected by notable changes in the global economic and trade context".

Trump was hoping his tariffs would lead to productive talks, but so far they've just lead to more tariffs. As counterintuitive as it might seem, the president sees this fact as ultimately helping USA workers.

China has dismissed the accusations and stood firm against U.S. pressure.

"China must open the market", he said. "We don't want to do it but we probably will have no choice".

"We have not yet seen any significant shift in the customer supply chains". Share prices have dipped, only to then resume their growth, in part because of deep corporate tax cuts that took effect this year and a solid USA economy in its 10th straight year of expansion.

The promised opening up of the economy also would pick up, with Li saying China will continue to reduce tariff rates and unreasonable fee burdens.

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