The comments made by China’s Ministry of Commerce came after the US President Donald Trump announced on Friday that Washington will impose an additional 5% duty the Chinese goods, hours after Beijing announced its latest retaliatory tariffs on about $75 billion worth of US goods, in the latest tit-for-tat moves in their bilateral trade dispute, Reuters reported.
“Such unilateral and bullying trade protectionism and maximum pressure violates the consensus reached by head of China and United States, violates the principle of mutual respect and mutual benefit, and seriously damages the multilateral trade system and the normal international trade order,” China’s ministry said in a statement on Saturday.
“China strongly urges the United States not to misjudge the situation or underestimate determination of the Chinese people,” it added.
Trump’s latest tariff move, announced on Twitter, said the United States would raise its existing tariffs on $250 billion worth of Chinese imports to 30% from the current 25% beginning on Oct. 1, the 70th anniversary of the founding of the communist People’s Republic of China.
The intensifying US-China trade war stoked market fears that the global economy will tip into recession, sending US stocks into a tailspin, with the Nasdaq Composite .IXIC down 3%, and the S&P 500 .SPX down 2.6%.
US Treasury yields also declined as investors sought safe-haven assets, and crude oil, targeted for the first time by Chinese tariffs, fell sharply.
Trump’s tariff response was announced after markets closed on Friday, leaving potentially more damage for next week.
“Sadly, past Administrations have allowed China to get so far ahead of Fair and Balanced Trade that it has become a great burden to the American Taxpayer,” Trump said on Twitter. “As President, I can no longer allow this to happen!”
US companies pressed to quit China
Also, Trump said on Friday he was ordering US companies to look at ways to close their operations in China and make more of their products in the United States instead, sending US markets down sharply in the new rhetorical strike at Beijing as trade tensions mounted.
Trump cannot legally compel US companies to abandon China immediately. He gave no detail on how he might proceed with any such order.
“Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA,” Trump wrote on Twitter. “We don’t need China and, frankly, would be far better off without them.”
The US Chamber of Commerce rebuffed Trump’s suggestion and urged China and the United States to quickly reach a deal in the long-running trade issue. “While we share the president’s frustration, we believe that continued, constructive engagement is the right way forward,” the group said.
Experts said tax policy changes and sanctions could be used to restrict or reduce US business activity in China, but it would take years to disentangle the world’s two largest economies. The consequences of a complete break to the world economy would be severe, they said.
China, for instance, holds $1.11 trillion in US Treasury securities.
For many products sold in the United States, there are few alternatives to Chinese production, and shifting production for major goods produced there could take years and be expensive.
American companies could also sue the US government in response to any order to shutter plants in China. The most effective option for Trump would be to restrict federal procurement from any companies that do business in China.
That would hit companies like Boeing Co (BA.N), Apple and General Motors (GM.N), which are both big US contractors and have large business interests in China.
Many US companies have already begun moving some operations out of China due to rising labor costs. But others, including General Motors, have large plants there to supply the Chinese market. They would resist any pressure to close their facility there, given the size and importance of the Chinese market, Reinsch said.
Last week, Trump backed off his Sept. 1 deadline for 10% tariffs on remaining Chinese imports, delaying duties on cellphones, laptops and other consumer goods.
The US Trade Representative’s Office delayed tariffs on more than half the $300 billion in Chinese-made goods telling companies the delay covered product categories where China supplies more than 75 percent of total US imports.