China says it “deeply regrets” the US decision to increase tariffs to 25 per cent on $US200 billion ($285 billion) worth of Chinese goods, ratcheting up tensions as the two sides pursued last-ditch deals to salvage a deal.
Chinese Vice Premier Liu He, US Trade Representative Robert Lighthizer and US Treasury Secretary Steven Mnuchin talked for 90 minutes on Friday (AEST) and were expected to resume talks on Saturday (AEST).
China’s Commerce Ministry said it would take necessary countermeasures, without elaborating, as talks between the two economic superpowers have now gone on for 10 months, costing companies in both countries billions of dollars.
Tensions between the US and China rose after a major setback in negotiations last week, when Beijing revised a draft deal and weakened commitments to meet American demands for trade reform.
Customs and Border Protection (CBP) imposed the new 25 per cent duty on affected U.S.-bound cargoes leaving China after 2pm (AEST) on Friday.
Goods in the more than 5700 affected product categories that left Chinese ports and airports before midnight will be subject to the original 10 per cent duty rate, a CBP spokeswoman said.
The biggest Chinese import sector affected by the rate hike is a $US20 billion-plus category of internet modems, routers and other data transmission devices, followed by about $US12 billion ($17 billion) worth of printed circuit boards used in a vast array of US-made products.
Furniture, lighting products, auto parts, vacuum cleaners and building materials are also high on the list of products subject to the higher duties.
The International Monetary Fund said on Friday the worsening dispute posed a threat to the global economy.
“As we have said before, everybody loses in a protracted trade conflict,” it said in a statement, calling for a “speedy resolution”.
In comments to Chinese state media on arriving in Washington, Mr Liu said raising tariffs “is very disadvantageous to both parties”.
“We come here this time, under pressure, which shows China’s greatest sincerity, and want to sincerely, confidently, and rationally resolve certain disagreements or differences facing China and the United States,” he said.
“I think there is hope.”
Earlier on Friday (AEST), Mr Trump took aim at the $US325 billion ($464 billion) in Chinese goods that were so far untouched by the trade war, saying he was “starting … paperwork today” to tax those with a punitive tariff of 25 per cent.
Mr Trump, who has adopted protectionist policies as part of his “America First” agenda aimed at rebalancing global trade and boosting US manufacturing, accused Beijing of reneging on commitments made during months of negotiations.
He said if the two sides could not make a deal, the US would go back to manufacturing products that China now makes.
US stock indexes closed lower on Thursday ahead of the trade talks, though they pared losses after Mr Trump said he had received a “beautiful” letter from Chinese President Xi Jinping. US oil prices slid and US Treasury yields fell as investors sought safe-haven assets.
Data released on Thursday showed the US goods trade deficit with China shrank to its smallest level in five years in March. That could further embolden Mr Trump as he escalates the trade war with Beijing.
Plans by Washington to lift tariffs could cut China’s growth by 0.3 percentage points but the strengthening economy has become more resilient to external shocks, a Chinese central bank adviser said on Friday.
Tariffs ‘life and death’ for small businesses
Chief executive of the Consumer Technology Association Gary Shapiro said the tariffs would be paid by American consumers and businesses, not China, as Mr Trump has claimed.
“Our industry supports more than 18 million US jobs – but raising tariffs will be disastrous,” Mr Shapiro said in a statement.
“The tariffs already in place have cost the American technology sector about $1 billion ($1.4 billion) more a month since October. That can be life or death for small businesses and startups that can’t absorb the added costs.”