Trump raises risk of economically harmful US-China trade war

US President Donald Trump delivers remarks to the National Federation of Independent Businesses in Washington US Tuesday. Jonathan Ernst Reuters

US President Donald Trump delivers remarks to the National Federation of Independent Businesses in Washington US Tuesday. Jonathan Ernst Reuters

The Trump administration said the penalties will be applied if China goes through with its promise to retaliate against U.S. tariffs announced last week.

China's commerce ministry immediately responded by saying the U.S. "practice of extreme pressure and blackmail departed from the consensus reached by both sides during multiple negotiations and has also greatly disappointed worldwide society".

China "doesn't want a trade war" but has to "fight back strongly", said a Commerce Ministry statement.

The commodities market also took a hit from the latest tariff threat.

If waves of USA tariffs start to damage the economy, analysts say Chinese policymakers may drop the efforts to tackle risky lending and return to old habits.

Most of that trade is in goods - not services - and most of it flows from China to the United States.

The president asserted in a statement Monday night that China is determined "to keep the United States at a permanent and unfair disadvantage". "Trump could put more pressure on other countries like Japan and North Atlantic Treaty Organisation courtiers", said Yoshinori Shigemi, global market strategist at JPMorgan Asset Management in Tokyo. But if trade relations get worse, it could be much less politically appealing for the US and China to collaborate on North Korea.

"We have China which claims itself a leader in globalisation, talking of the importance of integration, but the cybersecurity law is creating problems".

"I reminded him that's not fair competition", Pompeo said. "This is a problem that is long overdue in being tackled".

Pompeo declared that the alleged Chinese theft of United States intellectual property was "an unprecedented level of larceny".

Chinese regulators also are considering a tariff hike on an additional 114 products including medical equipment and energy products, the Finance Ministry said.

Trade war fears had ebbed somewhat in recent weeks after pressuring stocks earlier in the spring.

Shanghai stocks staged a modest 0.3 percent recovery after tumbling almost 4 percent on Tuesday to a two-year low, buoyed by soothing comments from the central bank chief and in state media, and a burst of share purchase plans.

The Dow sank 287 points on Tuesday, or 1.2%.

However, none of the tariffs announced by the USA on Monday will take effect until industries and consumers have a chance to make their views known in a 60-day public comment period.

Another warning has come from the chair of the customs law committee of the American Bar Association, Peter Quinter, who described the escalation of the trade conflicts as "frightening".

He doubts the latest dispute would damage the relationship between the two countries.

Such views are spreading in global financial and business circles.

Russia's economic development minister revealed Tuesday that his government was prepared to side with China in a burgeoning global trade war with the U.S.

Such a measure would negatively impact Canadian vendors.

"I'm really anxious that ... these things are going to get out of control".

Pundits said that President Donald J. Trump's new trade barriers stem directly from the "America First" trade policy he has espoused since the presidential campaign.

"Asset classes are priced quite high across the board".

Economists think the size of Trump's newest trade threats risk putting an even bigger dent in the U.S. economy.

Fears of a full-fledged worldwide trade war deepened Tuesday as Trump planned to slap punishing tariffs on another $200 billion of Chinese imports. US officials argue that this program unfairly discriminates against USA and other foreign companies operating in China. The US doesn't tax shoes imported from Canada either.

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