China has raised tariffs on around $75bn of US imports in retaliation for Donald Trump’s latest tariff increases, further escalating trade tensions that risk tipping the world economy into recession.
Tariffs of 10 per cent and 5 per cent on two tranches of goods will come into effect on 1 September and 15 December, China’s official Xinhua News Agency said.
Oil, light aircraft, cars and agricultural products are among more than 5,000 products affected.
The move appears to be in direct retaliation to Mr Trump’s announcement earlier this month that the US will put 10 per cent tariffs on $300bn of Chinese imports.
Stock markets in London, New York, Paris and Frankfurt dropped after the statement by China, which followed an apparent softening in its approach to trade relations with Washington. The Dow Jones opened down 0.5 per cent, with the S&P also falling.
Beijing called for a compromise from the US president this week but, after being rebuffed, hit back today with its own measures.
The spiralling conflict has heightened fears that rising protectionism, which has already hurt many exporters, could damage business confidence more widely and worsen the global economic slowdown.
The US administration has also publicly accepted that ordinary Americans may be hurt by the conflict. The president said this week that any economic damage inflicted is necessary because “somebody had to take China on”.
Before China’s latest announcement, analysts at JPMorgan said the trade war is already set to cost the average American household $600 per year, a figure that will rise to $1,000 if Mr Trump goes through with implementing the new tariffs on $300bn of goods.
Talks over a way forward appear to be deadlocked. China insists Mr Trump's punitive tariffs have to be lifted as soon as an agreement takes effect. But Washington says that at least some have to stay to ensure Beijing carries out any promises it makes.
The US claims Beijing's development plans violate its commitment to open up China's economy and are based on pressuring foreign companies to hand over technology secrets or stealing from them.