US-China trade war: China threatens retaliation as Trump rolls out $200bn tariff hike
China has warned it will strike back at the US after President Donald Trump’s tariff hike on Chinese goods came into force today.
China’s commerce ministry said it “deeply regrets” the move, which sees tariffs raised to 25 per cent on goods worth $200bn (£154bn), and said it would take necessary countermeasures.
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The hike comes amid frantic talks between the two countries as top negotiators try to rescue a failing deal aimed at ending a 10-month trade war.
Chinese stocks fell sharply after the lunch break as the new tariffs came into force, but quickly recovered ground.
The benchmark CSI 300 is now up more than three per cent, but remains below its opening price at the beginning of the week. Hong Kong’s Hang Seng index followed a similar pattern, and is now trading up roughly one per cent.
US stocks had ticked up overnight after seemingly optimistic comments from Trump, who said he had received a “beautiful letter” from Chinese President Xi Jinping.
But with no action from the Trump administration to reverse the move, the new tariffs came into force after midnight.
“Whether this is just a ‘re-raise’ on what may have been a bluff targeted to bring China to submission, or whether he's actually willing to undo months of progress remains to be seen,” said Konstantinos Anthis, head of research at ADSS.
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“But what's certain is that by going ‘all in’, Trump raised the odds of the game – and the likelihood of retaliation from China – potentially leading to a breakdown in talks.”
The Chinese commerce ministry said negotiations were continuing, and that it “hopes the United States can meet China halfway, make joint efforts, and resolve the issue through cooperation and consultation”.