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As trade tensions between China and the US escalated China’s US ambassador Cui Tiankai warned Washington, not to up the ante.
He made it clear that Beijing would respond “in kind” if the Trump’s administration presses ahead with plans to slap up to US$60 billion in tariffs on an array of Chinese goods.
“If they do we will certainly take countermeasures of the same proportion, and the same scale, same intensity…” he said.
Cui’s comments came after President Xi Jinping’s government imposed tariffs worth $3 billion on a number of food and wine products in response to US sanctions on cheap steel and aluminum imports.
US Trade Representative Robert Lighthizer then revealed a list of Chinese products to be targeted in the next round. Core issues were that the world’s second-largest economy had violated American intellectual property rights.
Democrat Senator Elizabeth Warren, pointed out after a visit to China pointed out: “Now, US policymakers are starting to look more aggressively at pushing China to open up the markets without demanding a hostage price of access to US technology”, she said.
Markets in the US reacted strongly to Beijing’s decision on counter tariffs. In trading, the S&P 500 Index fell 2.2%, while the Dow Jones Industrial Average dropped 1.9%.
There was more muted response in Asia. Japan’s Nikkei 225 slipped by 0.45%, or 96.29 points, to close at 21,292.29, while South Korea’s Kospi was down 0.07% at 2,442.43.
Hong Kong’s Index also posted minor losses, but the Shanghai Composite dipped 0.85% to end at 3,136.44 points and the Shenzhen Composite fell 0.78% to finish at 1,842.23 points.
Global markets have been in a state of flux since Trump announced plans to rebalance the trade deficit with China. Last year, it hit a record high of more than $375 billion.
“The economy is as strong as an ox,” braved Peter Navarro, a White House trade adviser, “investors need not fear a trade war”.
But, other economists warned that the threat of trade war still looms large on the horizon.