Trade war: China-US talks to resume amid threat of new tariffs

President Donald Trump and Xi Jinping both hold favourable enough economic hands to make it hard to predict who blinks first. — Reuters pic

Trump set to increase tariffs on $200 billion worth of Chinese goods

Even the USA government has filed plans to raise tariffs about $200 billion worth of Chinese imports by 10% to 25 percent Friday.

Global stock markets have tumbled after US President Donald Trump's unexpected threat to impose new tariffs on Chinese exports.

China has been a frequent target of Donald Trump's anger, with the United States president criticising trade imbalances between the two countries and Chinese intellectual property rules he says hobble United States companies.

The US imposed tariffs on $250bn worth of Chinese products past year.

The proposed USA measures are due to come into force at 00:01 EDT (05:00 GMT) early on Friday, and will see rates on a vast array of Chinese-made electrics, machinery, vehicle parts and furniture jump from 10% to 25%. This came following President Trump's tweets on Sunday threatening to escalate the trade war with China on Friday if he couldn't get a trade agreement done.

According to data from the General Administration of Customs, two-way trade between China and the U.S. declined 11.2 percent year-on-year to 1.1 trillion yuan ($162.5 billion) in the period from January to April.

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For 40 years, US leaders have prioritized deepening economic ties between the two countries rather than confront China over its trade practices. It last levied tariffs, of 5% to 10%, on US$60 billion of U.S. goods including liquefied natural gas and small aircraft in September.

The administration and analysts have been reluctant to specify what commitments the Chinese government has backpedaled on, but both have acknowledged that as the two countries have neared the finish line, there is a faction in Beijing that has found it hard to agree to commitments that would be enforceable under the deal. Their sensitivity has its origins in the treaties that Western powers, including the United States, forced a feeble Qing Dynasty to accept following the First Opium War in the 1840s.

Douglas H. Paal, vice-president of the Asia Program at the Carnegie Endowment for International Peace, said it "makes sense to continue the talks because the alternative would be a drastic signal to markets".

The tariffs would target chemicals, building materials, furniture and some consumer electronics among other goods. "The long-term goal here is to get a larger addressable market for USA companies".

USA officials are insisting that any deal be strictly enforced so that China lives up to its promises - something they say Beijing has repeatedly failed to do in the past.

The country's share markets have taken a battering due to the renewed trade tensions, however.

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Investors have been anticipating a deal throughout this year, which contributed to double-digit gains in all the major indexes.

The broad-based S&P 500 added less than 0.1 per cent at 2,885.16, while the tech-rich Nasdaq Composite Index also gained 0.1 per cent to 7,973.35.

While China's overall economic growth has remained steady so far this year, the outlook for exporters has been challenging.

But imports from the United States declined by even more - nearly 26%, widening China's trade surplus with the United States.

US-bound shipments fell more than 13% last month, according to official data released this week.

The S&P 500 index fell 0.2% to 2,879.42.

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