*BEIJING:* China urged the United States on Friday to “pull back from thebrink” as President Donald Trump’s plans for tariffs on up to $60 billionin Chinese goods moved the world’s two largest economies closer to a tradewar.
The escalating tensions between Beijing and Washington sent shivers throughfinancial markets as investors foresaw dire consequences for the globaleconomy if trade barriers start going up.
Trump is planning to impose the tariffs over what his administration saysis misappropriation of U.S. intellectual property. A probe was launchedlast year under Section 301 of the 1974 U.S. Trade Act.
“China doesn’t hope to be in a trade war, but is not afraid of engaging inone,” the Chinese commerce ministry responded in a statement.
“China hopes the United States will pull back from the brink, make prudentdecisions, and avoid dragging bilateral trade relations to a dangerousplace.”
In a presidential memorandum signed by Trump on Thursday, there will be a30-day consultation period that only starts once a list of Chinese goods ispublished.
That effectively creates room for potential talks to address Trump’sallegations on intellectual property theft and forced technology transfers.
Though the White House has said the planned tariffs were a response toChina’s “economic aggression”, Trump said he views China as “a friend”, andboth sides are in the midst of negotiations. A Chinese commerce ministryofficial said both sides were in touch, and communication channels weresmooth.
Meantime, China showed readiness to retaliate by declaring plans to levyadditional duties on up to $3 billion of U.S. imports including freshfruit, wine and nuts in response to imports tariffs Trump announced earlierthis month on steel and aluminum, which were due to go into effect onFriday.
The inevitable fall in demand from a full-blown trade war would spelltrouble for all the economies supplying the United States and China.
Feeling the chill, MSCI’s broadest index of Asia-Pacific shares outsideJapan dropped 2.45 percent, tracking a large overnight fall in Wall Streetshares, Shanghai shares shed 3.8 percent and Japan’s Nikkei lost 4.5percent, while perceived safe havens such as government bonds gained.
Williams estimated that the $506 billion that China exported to the UnitedStates drove around 2.5 percent of its total gross domestic product, andthe $50-60 billion targeted by the U.S. tariffs contributed just around0.25 percent.
Trump, however, appears intent on fulfilling election campaign promises toreduce the record U.S. trade deficit with China. A commentary published bythe official Xinhua news agency said the United States had adopted a “ColdWar mentality”, and “panic” over China’s economic rise was drivingWashington’s confrontational approach.