Beijing: Beijing on Tuesday accused Donald Trump of "blackmail" and warned it would retaliate in kind after the U.S. president threatened to impose fresh tariffs on Chinese goods, pushing the world's two biggest economies closer to a trade war. These penalties would go into effect, the president said, "if China refuses to change its practices" and proceeds with its plans for retaliatory tariffs. On Friday evening, China announced tariffs on USA products of an equal amount and implemented them on the same date (6 July) as the United States intends to implement tariffs on China.
On a day when the Dow dropped as much as 400 points because of fears of a US-China trade war, Navarro played down fears that escalating tariffs would harm the US economy. "Attitudes seem to be hardening".
Two decades ago, China's economy was largely fuelled by exports, but it has made progress in rebalancing towards domestic investment and consumption since the global financial crisis erupted last decade - limiting the damage trade tariffs could inflict on Beijing. Another 280 or so still need to undergo a public comment period, and will take effect later.
Asian trade-reliant economies and companies plugged into China's supply chains are anxious that they will suffer collateral damage if world trade slows down, hurting global growth and dampening business confidence.
The White House hasn't set a date for the imposition of any new tariffs beyond the initial list.
ANALYST'S TAKE: "President Donald Trump's unwillingness to back down became apparent this morning, once again sinking markets", Jingyi Pan of IG said in a report. "Rather than altering those practices, it is now threatening United States companies, workers, and farmers who have done nothing wrong".
Trump announced hefty tariffs on $50 billion of Chinese imports on Friday, laying out a list of more than 800 strategically important imports from China that would be subject to a 25 percent tariff starting on July 6, including cars.
He said China's recent claims of "openness and globalisation" are "a joke".
"This practice of extreme pressure and blackmail deviates from the consensus reached by both parties on many occasions and is disappointing for the global community", the Commerce Ministry said in a statement.
President Donald Trump increasingly seems headed toward a trade war with China, and USA consumers could soon start feeling the squeeze.
Beijing appeared to be trying to minimize the impact on its own economy by picking US products that can be replaced by imports from other suppliers such as Brazil or Australia.
Shanghai-based hedge manager David Dai said the rapidly escalating trade tensions between Washington and Beijing have added woes to an already fragile stock market and make calling the bottom very hard. That means things like tourism and education, industries from which the United States benefits a lot more than China does.
Shares in supermarket Tesco, Britain's biggest retailer, meanwhile jumped 2.6 percent after the company reported solid first-quarter sales.
USA light crude oil hit a two-month low of US$63.59 a barrel before recovering somewhat to trade at US$64.72, down 30 cents, by 1100 GMT. "I think people still don't think we'll blow up into a full global trade war that'll cause a recession".
Chinese companies listed in the USA took sharp losses.
Oil prices too dipped as investors anxious that the dispute would damage economic growth. "For China's part, its leaders will be determined not to be seen to back down to foreign pressure".