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U.S. escalates trade war amid negotiations, China says it will hit back

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U.S. escalates trade war amid negotiations, China says it will hit back

U.S. escalates trade war amid negotiations, China says it will hit back

U.S. President Donald Trump's tariff increase to 25% on $200 billion worth of Chinese goods takes effect, and Beijing says it will strike back, ratcheting up tensions as the two sides pursue last-ditch talks to try salvaging a trade deal.

Francesca Lynagh reports.

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U.S. escalates trade war amid negotiations, China says it will hit back

Donald Trump made good on his promise to hike up tariffs on Chinese goods on Friday (May 10) -- right in the middle of negotiations between both sides in Washington.

(SOUNDBITE) (English) U.S. PRESIDENT DONALD TRUMP RESPONDING TO QUESTION ABOUT WHETHER HE EXPECTS TO HAVE A TRADE DEAL WITH CHINA THIS WEEK, SAYING: "So, I have no idea what's going to happen.

I did get last night a very beautiful letter from President Xi.

Let's work together.

Let's see if we can get something done.

But, they renegotiated the deal.

I mean they took, whether it's intellectual property theft.

They took many, many parts of their deal and they renegotiated.

You can't do that'' The U.S. hiked levies from 10% to 25% for $200 billion worth of Chinese goods.

Reuters' Ben Blanchard is covering the story from Beijing.

(SOUNDBITE)(English) REUTERS' BEN BLANCHARD SAYING: ''China's commerce ministry responded extremely quickly after the U.S. tariffs kicked in.

Within about the space of a minute it put out a statement expressing ''deep regret'' at what the United States had done and threatening also that it would take counter measures, saying essentially that it would strike back.

However we are still waiting to see what those counter-measures are.'' Facing the most pain: high-tech goods from internet modems to circuit boards.

But also more humdrum items like vacuum cleaners and furniture.

According to U.S. Customs and Border Control, any goods which left Chinese ports or airports before the midnight deadline will not be subject to the new increased duty.

Goldman Sachs called it a window of opportunity -- a few weeks for negotiators to hammer out a deal before the tariffs really bite.

One industry insider called the hike quote 'disastrous' for the tech industry, and the public as well.

(SOUNDBITE)(English) REUTERS' BEN BLANCHARD SAYING: ''However if you want to view at least a little bit of a silver lining to the cloud here, as it were, the fact that the vice premier, Liu He, did in fact end up going to Washington and is still in Washington and is expected to resume his talks on Friday morning, is probably a positive sign.

If China had been extremely angry about this, more angry than they are at the moment, they would have simply canceled the trip.

The fact they didn't is a sign from the Chinese that they do want to continue talking and they do want to try and find a way out.

Whether or not they do reach an agreement, looks at the moment, pretty unlikely.''




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