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Trump ratchets up pressure on China, threatens tariff hikes

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WASHINGTON: President Donald Trump dramatically increased pressure on China to reach a trade deal, saying he would hike US tariffs on $200 billion worth of Chinese goods this week and target hundreds of billions more soon.


The move marked a major escalation in tensions between the world’s largest economies and a shift in tone from Trump, who had cited progress in trade talks as recently as Friday.


Stock markets sank and oil prices tumbled as negotiations were thrown into doubt.


The Wall Street Journal reported that China was considering cancelling this week’s trade talks in Washington in light of Trump’s comments, which took Chinese officials by surprise.


A less than rosy update from United States Trade Representative Robert Lighthizer, including details that China was pulling back from some previous commitments, prompted Trump’s decision.


“The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!” Trump said in a tweet.


US officials did not weigh in on whether China would attend this week’s talks. The White House and the US Trade Representative’s Office declined to comment. China’s commerce ministry did not immediately respond to a request for comment.


“The atmosphere of the negotiations has changed,” said a Chinese official with knowledge of the situation.


Whether the talks would proceed and how they would proceed are issues that are now being re-evaluated, the official said on condition of anonymity “All that depends on the attitude of the United States,” the official said.


The editor of an influential, Chinese state-run newspaper said Vice Premier Liu He was unlikely to go.


“Let Trump raise tariffs. Let’s see when trade talks can resume,” Hu Xijin, editor-in-chief of the tabloid the Global Times, tweeted.


The newspaper is published by the ruling Communist Party’s People’s Daily, but it is not considered an official publication and does not speak for the government.


Chinese media outlets have been told not to independently report on Trump’s overnight tweets or tweet about them, and instead adhere to any report from the official Xinhua news agency, said a source with direct knowledge of the matter.


Global financial markets, which had been expecting news of a trade deal soon, went into a tailspin. US equity futures fell more than 2 per cent and stocks across trade-reliant Asia tumbled, with China’s main indexes plunging 5 per cent.


“There is still a question of whether this is one of the famous Trump negotiation tactics, or are we really going to see some drastic increase in tariffs,” said Nick Twidale, Sydney-based analyst at Rakuten Securities Australia. If it’s the latter, we’ll see massive downside pressure across all markets.” Trump said tariffs on $200 billion of goods would increase to 25 per cent on Friday from 10 per cent, reversing a decision he made in February to keep them at the 10 per cent rate thanks to progress between the two sides.


The president also said he would target a further $325 billion of Chinese goods with 25 per cent tariffs “shortly,” essentially covering all products imported to the United States from China.


Mindful of his 2020 re-election bid, Trump suggested the measures were not leading to price increases for US consumers. “The Tariffs paid to the USA have had little impact on product cost, mostly borne by China,” he tweeted. — Reuters


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