Trade war: Trump says US-China relations remain ‘very strong’

President Donald Trump says US-China relations remain “very strong” despite the two countries being embroiled in a trade war. According to BBC news reports

Mr Trump said talks between Washington and Beijing will continue even after a deadline passed on Friday for them to reach an agreement.

As a result the US raised tariffs to 25% from 10% on goods from China.

China says it “deeply regrets” the US action and would have to take “necessary counter-measures”.

However Beijing also confirmed on Friday that further negotiations would take place following two days of what were described as “honest” and “constructive” talks.

The latest US move raises tariffs on $200bn (£153.7bn) worth of Chinese imports.

On top of the tariffs implemented on Friday, Mr Trump said a process had begun to place the full 25% tariff on a further $ 325bn of Chinese goods. He post on the Twitter “Over the course of the past two days, the United States and China have held candid and constructive conversations on the status of the trade relationship between both countries. The relationship between President Xi and myself remains a very strong one, and conversations.. “

Mr Trump earlier said he was in “no rush” to reach a trade agreement following two days of bilateral talks. Critics pointed out on Twitter that it is not China who will pay the taxes, but US importers, and ultimately its consumers.

Only recently, the US and China appeared to be close to ending months of tensions over trade.

What has China’s reaction been?

China’s Commerce Ministry confirmed the latest US tariff increase on its website.

“It is hoped that the US and the Chinese sides will work together… to resolve existing problems through co-operation and consultation,” it said in a statement.

Chinese stock markets rose on Friday, with the Hang Seng index up less than 1% and the Shanghai Composite more than 3% higher.

What will be the impact of the tariff rise?

The US-China trade war has weighed on the global economy over the past year and created uncertainty for businesses and consumers.

Even though Mr Trump has downplayed the impact of tariffs on the US economy, the rise is likely to affect some American companies and consumers as firms may pass on some of the cost, analysts said.

Deborah Elms, executive director at the Asian Trade Centre, said: “It’s going to be a big shock to the economy.

“Those are all US companies who are suddenly facing a 25% increase in cost, and then you have to remember that the Chinese are going to retaliate.”

French Finance Minister Bruno Le Maire warned that the trade dispute escalation threatened jobs across Europe. “There is no greater threat to world growth,” Mr Le Maire pointed

The UK chancellor, Mr Hammond, said he was “optimistic” that an all-out trade war could be avoided, but admitted that the UK’s economy could be affected by growing tensions between the two countries. He was “disappointing” to see talks break down between China and the United States, and called on them to resolve their differences through the World Trade Organisation.

Who will pay the price?

Mr Trump’s tariff increases have taken many businesses in China and America by surprise, fuelling their anxieties about investment and supply chain viability.

Chinese exporters say passing on costs to their US customers may be the only way to compensate for dwindling profit margins.

“The US importers will have to absorb it and transfer it on to consumers,” Herbert Lun, a Chinese haircare electronics maker, told the Financial Times.

America’s farmers are suffering too. Shipments of soybeans – one of the most valuable US agricultural export crops – to China have slumped.

A combination of higher tariffs and depressed farm commodity prices are putting US farmers under increasing pressure, economists say.

Davie Stephens, a west Kentucky farmer and president of the American Soybean Association, told local media that farmers are “in a desperate situation”.

Why are the US and China at odds?

China has been a frequent target of Mr Trump’s anger, with the US president criticising trade imbalances between the two countries and Chinese intellectual property rules, which he says hobble US companies.

Some in China see the trade war as part of an attempt by the US to curb its rise, with Western governments increasingly nervous about China’s growing influence in the world.

Both sides have already imposed tariffs on billions of dollars worth of one another’s goods.

Last year the US imposed a 10% tariff on $200bn worth of Chinese products – including fish, handbags, clothing and footwear.

Editor: James Norris

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