US-China trade war escalates as new tariffs come into force

The United States and China imposed more tariffs on billions of dollars worth of each other’s products on Thursday in the latest escalation in a trade war between the world’s two largest economies.

American penalties apply to $16 billion worth of Chinese goods including automobiles, factory machinery, and metals.

China had to “continue to make the necessary counter-attacks”, its commerce ministry said in a statement immediately after US tariffs began at 04:00 GMT.

China said it will also file a legal challenge with the World Trade Organization (WTO) over the US’ increase, which American officials say was a response to unfair trade practices by Beijing.

Thursday’s 25 percent increase came as envoys from the two countries met in Washington, DC in their first high-level talks in two months. No details were released about the two-day meeting that began on Wednesday.

In July, the United States hit China with a 25 percent increase in tariffs on $34 billion worth of goods, prompting Beijing to hit back with levies on the same amount.

Fifty-billion dollars worth of imports have now become subject to tariffs. The US Trade Representative is currently hearing arguments for and against imposing duties on some $200 billion worth of Chinese imports.

The US accuses China of unfair trading practices, particularly on technology. US President Donald Trump also wants to slash the country’s trade deficit, which reached $375 billion last year.

China’s foreign ministry said on Thursday it wants to reach a good result in trade talks with the US, adding it hopes Washington can meet Beijing halfway.

“If the trade war can end as soon as possible, I think the effect on the Chinese economy will be relatively small,” said economic commentator Hu Xingdou.

“But if the trade war continues to escalate, from $50 billion to $200 billion to $500 billion, then the blow to China’s confidence will indeed be relatively large.”

Al Jazeera’s Adrian Brown, reporting from Beijing, said the latest tariffs come at a time of economic difficulty for China.

“It’s not just the tariff war that China’s having to deal with at the moment, the economy is also starting to slow and you’re seeing signs of a lack of confidence among consumers. Consumers are starting to spend less to tighten their belts. They worry not so much about what’s happening with the trade war, but what’s going to happen in the future,” he said.

“One of the biggest red flags is debt. China is sitting on a mountain of debt and that pile is going to get bigger because China’s government is … turning on the credit tap to try to insulate its industries and businesses from the effects of this tariff war.”

Trade war begins as China strikes back against US over tariffs

Beijing has rejected US demands to scale back plans for state-led technology development, which its trading partners say violates market-opening commitments.

The yuan currency has plunged in recent months and businesses’ confidence is being affected, analysts say.

An all-out trade war could shave off 0.25 percent of the gross domestic product of both economies this year, with more damage expected in 2019, according to research by Singapore’s DBS Bank.

“There’s a deep unease about what the future holds if this becomes a protracted trade war, with these tariffs remaining in force not just for weeks or months, but possibly years,” said Brown.