US-China trade war: China promises to ‘keep retaliating’ against Trump’s tariffs


China will continue to retaliate against US trade tariffs, finance minister Liu Kun said today, after talks in Washington between the superpowers fizzled out without resolving their escalating trade war.

US markets fell at the end of trading last night, while the Dow closed 0.3 per cent lower, with Boeing and Caterpillar dragging the index down as low-level negotiations between the two superpowers wrapped up without resolving the trade dispute.

Fresh tariffs came into force yesterday, with President Trump issuing 25 per cent taxes on $16bn (£12.5bn) of Chinese imports, and China responding in kind with tariffs on 333 American products. In total, $100bn of both countries’ exports are subject to duties.

“China doesn’t wish to engage in a trade war, but we will resolutely respond to the unreasonable measures taken by the United States,” Liu told Reuters in an interview.

“If the United States persists with these measures, we will correspondingly take action to protect our interests.”

However, he added that he wants to minimise tariffs’ impact onboth native and foreign businesses operating in China.

“When we take measures, we try our hardest not to harm the interests of foreign businesses in China. That’s why our tariff measures are targeted to avoid affecting them as much as we can.”

Analysts said the trade talks are widely regarded as a disappointment.

“The bar had been set low for the trade negotiations and it appears that even those low expectations have been missed,” said Jasper Lawler, head of research at London Capital Group.

While China’s Commerce Ministry described the talks as “constructive” and frank, with the parties agreeing to keep in touch on next steps, market sentiment dipped, despite Trump prefacing the talks with remarks indicating he expected the discussions to end in little progress.

Chinese equities rallied despite the inaction, with the Shanghai Stock Exchange Composite Index closing up 0.2 per cent, and its Shenzhen Stock Exchange also up 0.2 per cent.

However, the lack of a positive outcome on “sends a message to traders that this situation won’t be resolved quickly”, said CMC Markets analyst David Madden.

The US dollar managed to climb yesterday as investors took advantage of its weakened value in the face of Trump’s criticism of the Federal Reserve, as well as market fears around legal woes facing the Trump administration.

Madden added: “The US dollar rallied yesterday as bargain hunting kicked in, and the currency seemed to enjoy the so-called flight-to-quality effect again, on account of heightened trade tensions with China.”

However, investors are waiting for Federal Reserve chairman Jerome Powell’s speech at Jackson Hole later today following Trump’s tirade at the bank’s decision to raise interest rates.

Connor Campbell, financial analyst at Spreadex, said markets have proved resilient in the face of trade war escalations and the UK’s no-deal Brexit advice.

“Given the amount of bad news out there at the moment – from Thursday’s trade talk-undermining tariff tit-for-tatting between the US and China, the ominous clouds of a no deal Brexit, and Trump’s potential legal problems – the markets have done well to not lose their heads this week,” he said.