Trade war: China pulls out of talks with the United States over tariffs

China flag US flag

China flag US flag

China reached into the USA heartland in its escalating trade war over President Donald Trump's tariffs, using an advertising supplement in Iowa's largest newspaper to highlight the impact on the state's soybean farmers as "the fruit of a president's folly".

But in a policy statement issued just hours after the dual tariffs took effect, Beijing accused Washington of using tariffs as a means of intimidating other countries to submit to USA wishes on economic matters. A news report suggested that China will block any potential negotiations unless United States president Trump withdraws his threats of further tariffs on the country.

Vice Premier Liu He was planning to travel to Washington next week with a trade delegation, following an invitation from US Treasury Secretary Steven Mnuchin. The tariffs imposed were on a further $200bn (£152bn) worth of Chinese products.

Forty-eight hours later, US Secretary of State Mike Pompeo was bragging on Fox News that there would be only one victor.

In a first, the Trump administration has also punished a unit of China's defense ministry for buying fighter jets and missiles from Russian Federation in defiance of sanctions on Moscow.

Beijing set its new levies on $60 billion of USA goods at 5 and 10 percent and warned it would respond to any rise in United States tariffs on Chinese products accordingly.

After accusing the U.S. of launching the "largest trade war in economic history", analysts worry Beijing could shift to threatened "qualitative" retaliatory measures, such as damaging USA firms in China or restricting the export of crucial items to the US.

Rob Carnell, chief Asia economist at ING, said in a note to clients that in the absence of any incentives Beijing would likely hold off on any further negotiations for now.

"As a result, trade and economic friction between the two sides has escalated quickly over a short period of time, causing serious damage to the economic and trade relations which have developed over the years through the collective work of the two governments and the two peoples, and posing a grave threat to the multilateral trading system and the principle of free trade", said Xinhua, quoting the white paper.

"The US-China trade war has no clear end in sight".

"With generic polls favouring the Democrats, they may feel that the trade environment will be less hostile after November 6".

Trump earlier this month accused China of targeting rural voters who support his presidency by hitting agricultural goods. Beijing countered with tariffs on $60 billion worth of goods, at rates between 5 percent and 10 percent. Beijing vowed to strike back, slapping duties of up to 10pc on an additional $60bn in American products.

Analysts said the news reflects the breakdown in the global relationship.

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