China has announced a 3 billion dollar (£2.13 billion) list of US goods including pork, apples and steel pipe that may be hit with higher tariffs as part of a spiralling trade dispute with Donald Trump.
Companies and investors worry the row could depress global commerce, while the Chinese trade ministry has urged Washington to negotiate a prompt settlement to the conflict over the president’s tariff hike on steel and aluminium.
Separately, the ministry also criticised Mr Trump’s decision to approve a possible tariff hike on billions of dollars of Chinese goods in a dispute over Beijing’s technology policy.
The ministry slammed that as “trade protectionism” but gave no indication how Beijing might respond.
The ratcheting up of tensions sent a shiver through world financial markets.
The dollar dipped to 104.85 yen (71p) as investors shifted into the Japanese currency, which is viewed as a “safe haven” from risk.
China’s proposed tariff hikes in response to the steel and aluminium duties appeared to be aimed at increasing domestic US pressure on Mr Trump by making clear which exporters, including farm areas that voted for the president in 2016, might be hurt.
“Beijing is extending an olive branch and urging the US to resolve trade disputes through dialogue rather than tariffs,” said economist Vishnu Varathan of Mizuho Bank in a report. “Nevertheless, the first volley of shots and retaliatory response has been set off.”
The ministry said Beijing was considering a tariff increase of 25% on pork and aluminium scrap, mirroring Trump’s 25% charge on steel.
A second list of goods including wine, apples, ethanol and stainless steel pipe would be charged 15%, mirroring Mr Trump’s tariff hike on aluminium.
The ministry said Chinese purchases of those goods last year totalled 3 billion dollars (£2.13bn).
That would be less than 1% of Chinese imports of US goods and far smaller than the range of imports targeted by Mr Trump’s order Thursday in the technology dispute.
American business groups have warned Mr Trump his aluminium and steel tariffs could hurt the US economy and disrupt exports.
Companies worry the dispute could spiral into tit-for-tat import controls by governments worldwide that could suppress global trade.
The US tariff hike on steel and aluminium imports also has irked Japan, America’s closest ally in Asia.
“We have repeatedly told the US side that steel and aluminium imports from its ally Japan will not adversely affect America’s national security, and that Japan should be excluded,” Chief Cabinet Secretary Yoshihide Suga said at a routine news conference Friday.
China’s top economic official, Premier Li Keqiang, appealed to Washington on Tuesday to “act rationally” and said, “we don’t want to see a trade war”.
The higher American duties on aluminium and steel have little impact on China, which exports only a small amount of those products to the United States.
But private sector analysts have said Beijing would feel obligated to take action to avoid looking weak in a high-profile dispute.
The Commerce Ministry said the higher US tariffs “seriously undermine” the global trading system. It rejected Mr Trump’s contention they are needed to protect US national security.
“The Chinese side urges the US side to resolve the concerns of the Chinese side as soon as possible,” the ministry said. It appealed for dialogue “to avoid damage to overall Chinese-US co-operation.”
Beijing reported a trade surplus of 275.8 billion dollar (£195.36bn) with the United States last year, or two-thirds of its global total. Washington reports different figures that put the gap at a record 375.2 billion dollars (£265.6bn).