President Donald Trump's first tariffs are scheduled to hit $34 billion of Chinese imports on Friday, and Beijing plans to swiftly respond with levies on an equal amount of goods.
"The government has stated its position many times that we will absolutely not fire the first shot", Gao Feng, a spokesman for China's commerce ministry, said today.
Economists have for months warned of the potential damage to the United States and global economies from aggressive trade policies that evolve into protectionism, which would raise prices and upend global supply chains.
"All we can do is adjust our supply chain here depending on the size of the price increases".
China rejected "threats and blackmail" ahead of a threatened US tariff hike, striking a defiant stance Thursday in a dispute companies worry could flare into a full-blown trade war and chill the global economy.
A Chinese foreign ministry spokesman said China is prepared to take action against the US if President Trump releases a proposed list of tariffs on Chinese goods this coming Friday.
The retaliatory tariffs unveiled by Canadian Foreign Minister Chrystia Freeland on Friday mostly target US steel and aluminum products, but also hit consumer food products, such as coffee, ketchup and whiskey. According to Bloomberg, President Trump will cut as much as half a percentage point from staggering growth levels of around 6.9 percent.
Michael Hewson, the chief market analyst at CMC Markets UK, said: "In a holiday shortened USA session before the 4 July holiday, U.S. equity markets finished lower on the day as trade concerns kept investors cautious".
Despite the escalating rhetoric and explosive tweets, Senate Minority Leader Chuck Schumer, a Democrat, attacked Presdient Trump last week for not being tougher on China.
"Frankly, I don't know what action China could take at the moment that would allow the USA to not impose tariffs", the U.S. source said, adding that there was no evidence the two governments had any substantive engagement at the moment that could lead to the shelving of duties.
Investors watching the trade tit-for-tat between the United States and China may well have reason to fear the havoc a full blown conflict between the world's two biggest economies could wreak on the global economy.
Of the US$34 billion worth of goods to be subject to tariffs, the spokesman said that around 59% are made by overseas companies, a large proportion of which were US-based. China's currency suffered its worst quarter since 1994 in the three months through June, raising questions over whether the government was deliberately letting it slide as a tactic in the trade war.
"While the Trump administration is anxious about gains and losses, Chinese people have unfaltering confidence in China's future". Ambassador Richard Grenell reportedly told representatives from Volkswagen, Daimler and BMW about a US proposal to reduce all auto tariffs.
Trump has threatened other measures created to limit China's ability to access the US.
"The markets lack strong direction without incentives from the United States, where their markets were closed yesterday". The European Union has taken a firm stance ahead of the escalation, with Bank of England Governor Mark Carney saying that the rise of protectionism will affect trade flows and push up import costs.
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