China blasts new USA tariff threat as 'blackmail'

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The statement from Trump on Monday said that China's response showed that Beijing had no plans to address the underlying IP theft and required escalation by the US.

"If the United States loses its senses and comes up with a new list, China will be forced to strike back hard, and launch comprehensive measures that match the USA move in quantity and quality", the Chinese Commerce Ministry said in a statement Tuesday.

It gave no details.

The move comes just three days after the president detailed an initial $50 billion in imports that would be taxed an additional 25 percent, which he said was punishment for the theft of intellectual property from US companies, as well as the trade gap between the two countries.

China had offered to ramp up purchases of American goods by only $70 billion to help cut the yawning trade imbalance with the United States, whereas Trump had demanded a $200 billion deficit cut.

The news hit stock markets in Asia, where Shanghai shed three percent in the morning, Hong Kong lost more than two percent and Tokyo was one percent lower.

The U.S. imported $505 billion of goods from China a year ago.

"Asian currencies and stocks are feeling most of the impact compared to Europe but that could quickly change if this escalates", said fund manager Constantin Bolz of German-based wealth management firm Portfolio Concept.

It follows last Friday's decision to to impose 25% tariffs on $50bn of Chinese products. "And as a USA soybean farmer with the prices below break even now, it's definitely not good for us, either". -Chinese trade means Beijing doesn't import enough American goods to match Trump's latest threat.

"However, and unfortunately, China has determined that it will raise tariffs on Dollars 50 billion worth of United States exports". That would leave about $120 billion of imports available for retaliatory tariffs after Saturday's announcement. "It undermines the interests of the Chinese and American people, the interests of companies and the interests of the people all over the world", the spokesperson added.

US business groups said members were bracing for a backlash that would affect all American firms in China, not just in sectors facing tariffs. But the rhetoric is intensifying, with Trump lashing out at Beijing over its threat to retaliate against the administration's latest proposed tariffs.

Economists warn Washington might be undercutting its negotiating position by alienating potential allies. In 2017, the U.S. trade deficit with China was a record $375.2 billion, but that did not include services.

Mr. Trump accused Beijing of being unwilling to resolve the dispute over complaints it steals or pressures foreign companies to hand over technology.

As reported by Reuters, Beijing is looking at becoming more cautious about spending to reduce the risks from a rapid build-up in debt.

Louis Kuijs, head of Asia Economics at Oxford Economics, agreed that China would not be able to compete with the USA on a tariff-per-dollar of imports basis. None of the tariffs could take effect for 60 days.

On Friday, Trump said he planned to push ahead with tariffs on $50 billion worth of Chinese imports.

His latest move appears to reflect that logic: China can not mount a reciprocal response to tariffs on $200 billion worth of its goods, since the country only imported $130.4 billion of American products previous year.