The United States escalated its trade war against China, slapping steep tariffs on another $16 billion in Chinese goods on Thursday.
The move triggered a swift tit-for-tat retaliation from Beijing, even as negotiators from both sides seek to soothe trade tensions.
The latest action completes the first round of $50 billion in Chinese products that President Donald Trump targeted with Beijing striking back at American products dollar-for-dollar at each step.
China “firmly opposes the tariffs and has no choice but to continue to make the necessary counter-attacks”, the commerce ministry said in a statement.
Beijing hit back with tariffs on an equal amount of US goods, targeting iconic products such as Harley-Davidson motorcycles, dump trucks and asphalt, among hundreds of others.
China’s commerce ministry said the US tariffs were “clearly suspected of violating WTO rules” and noted it would file a lawsuit against them under the WTO’s dispute resolution mechanism.
The escalation came as the world’s two largest economies were holding their first formal discussion since June on the spiralling and multifaceted trade war.
China has said it will react immediately with tariffs on the same amount of US goods, targeting iconic products like Harley motorcycles, bourbon and orange juice, among hundreds of others.
Trump has pushed aggressive trade actions to lower the US trade deficit, which he equates with theft from Americans. But US trading partners have retaliated aggressively, which is hurting American farmers, manufacturers and consumers.
US businesses have become increasingly concerned about the tariffs that are raising prices for manufacturers and could hurt the economy, although the prospect of a negotiated solution buoyed Wall Street this week.
However, Federal Reserve officials have warned that “an escalation in international trade disputes was a potentially consequential downside risk for real activity,” according to the minutes of the July 31-August 1 policy meeting.
A large-scale and prolonged dispute likely would adversely impact business sentiment, investment spending and employment, the officials warned, and boost prices, which would “reduce the purchasing power of US households.”
And still pending are the possibility of new duties on another $200 billion in Chinese goods, which are the subject of public hearings this week, as well as Trump’s proposed 25 percent taxes on all auto imports to protect the US industry.
But Commerce Secretary Wilbur Ross said China will not be able to continue to retaliate at the same pace as the United States.
“Naturally they’ll retaliate a little bit. But at the end of the day, we have many more bullets than they do. They know it,” Ross said on CNBC. “We have a much stronger economy than they have, they know that too.”
Trump, who has threatened to target all $500 billion in goods the US imports from China, has made that same point, noting that Beijing cannot continue to retaliate in kind since it imports less than $200 billion a year in American goods.
US Treasury’s David Malpass, undersecretary for international affairs, is leading two days of talks with China’s Vice Commerce Minister Wang Shouwen, and Chinese Vice Finance Minister Liao Min that began Wednesday.
The talks were to continue Thursday morning, but the Treasury has not specified what topics are being discussed.
Trump said earlier this week that he was not expecting much from the dialogue.
“We are a country that has been ripped off by anybody and we are not going to be ripped off anymore,” Trump said at a campaign rally in West Virginia on Tuesday.
“It has to be a two-way street. We only have one-way streets not only with China but everybody.”
Thousands of large and small companies and industry groups have urged the Trump administration to reconsider the tariffs which some say could put them out of business.
But so far the Trump administration has largely been deaf to the complaints, as only a handful of product lines have been shielded from the punitive duties.
The administration already was forced to announce a $12 billion aid program for farmers hurt by the trade wars, as US agricultural products, like soybeans, were an easy target for China.