US and China raise tariffs in new round of trade dispute

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The United States and China have imposed more tariff hikes on billions of dollars of each other’s cars, factory machinery and other goods in an escalation of a battle over Beijing’s technology policy.

The 25% increases took effect as envoys from both sides held their first high-level talks in two months in Washington.

No details were released about the two-day meeting that started on Wednesday.

The penalties, previously announced, apply to 16 billion dollars (£12.4 billion) of goods from both sides including cars and metal scrap from the United States and Chinese-made factory machinery and electronic components.

Malaysia Financial Markets
Asian stock markets were mixed after US and Chinese officials held talks on their deepening trade dispute (Yam G-Jun/AP)

The Chinese government criticised the US increase as a violation of World Trade Organisation rules and said it would file a legal challenge.

Beijing has rejected US demands to scale back plans for state-led technology development that its trading partners say violate its market-opening commitments and American officials worry might erode the United States’ industrial leadership.

With no settlement in sight, economists warn the conflict could spread and knock up to 0.5 percentage points off global economic growth through 2020.

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