Joe Cash and Nicoco Chan
Chinavowed on Tuesday to "fight to the end" against US tariffs as some citizens railed against President Donald Trump after he singled out Beijing for further levies, setting the stage for a standoff between the world's top two economies.
If Trump sticks to his plan for anadditional 50% tariffonChinaunless it withdraws its retaliatory levies on the US, total new U.S. duties on Chinese goods this year could rise to 104% by Wednesday.
Trump's previous tariff increasesare alreadysqueezing Chinese exporters' margins to the point of suffocationsofurther hikes would only serve to underscore Washington's appetite for brinkmanship and its desire to cutChinaout of the world's biggest consumer market as a matter of principle, analysts say.
But with globalsupply chains in jeopardy, Beijing is under pressure to respondasPresident Xi Jinpingprepares to meetSpain's prime minister, andbegin atour of Southeast Asia.
"The US side's threat to escalate tariffs againstChinais a mistake on top of a mistake, once again exposing the American side's blackmailing nature," the commerce ministry said in a statement.
"If the United States insists on having its way,Chinawill fight to the end."
Trump said he would impose theadditional 50% dutyon US imports fromChinaon Wednesday if Beijing did not withdraw the34% tariffsit imposed on US products last week.
The Chinese levies had come in response to "reciprocal" duties of 34% announced by Trump, on top of tariffs of 20% imposed earlier this year, lifting to 76% the average US tariff on Chinese goods.
"If the tariffs keep going up and up, it becomes a battle of wills and principles rather than economics," said Xu Tianchen, a senior economist forChinaat the Economist Intelligence Unit.
"SinceChinaalready faces a tariff rate in excess of 60%, it doesn't matter if it goes up by 50% or 500%," he added.
Chinahas stepped up efforts to shield its economy from global market turmoil following Trump's announcement.
On Tuesday,China's state planner said it had met domestic private firms, including Trina Solar,ride-hailing company Didi, and Goertekto hear suggestions on how to deal with the aditional duties.
Whileseveral state holding companies pledged to increase share investment, a slew of listed companies unveiled buybacks, and the central bank pledged liquidity support for fund Central Huijin after it intervened to support sinking stocks.
But there is no escaping the fact that Trump's affinity for tariffs risks derailingChina's largely export-led economicrecovery given that no other country comes close to the consumption power of the US, where Chinese producers sell more than $400 billion worth of goods annually.
The Chinese people "do not provoke trouble, nor are we afraid of it," Lin Jian, a spokesperson forChina's foreign ministry, told a regular press conference.
"The Chinese people's legitimate right to development must not be deprived," he added.
Targeting China
Trump's tariffs will be felt particularly keenly as they target thetwo main strategiesChinese exporters have used to blunt the impact of the trade war: shifting some production abroad and boosting sales to non-US markets.
Dan Wang, aChinaexpert at Eurasia Group, said Trump had effectively already wiped out Chinese exporters' profits once U.S. import duties passed the 35% mark.
"After that,Chinashouldn't export to the US at all. It could be 1 000%, but since there is no trade, there is no harm."
"Europe is and will be the most profitable market forChinanow," she added.
Xi is expected to meet Spain's Prime Minister Pedro Sanchez on Friday, with the agenda likely to cover finding a resolution to trade tension with Brussels overChina's electric vehicle exports, as well as Trump's broader tariff onslaught.
The Chinese leader will then visit Malaysia, Vietnam and Cambodia, three economies that gained from relocation by Chinese manufacturers to avoid US sanctions during Trump's first term, but which now face steep levies of their own.
REUTERS
