Picture: 123RF/iloveotto
Picture: 123RF/iloveotto

Washington/Beijing — US President Donald Trump on Monday warned Beijing not to retaliate in an escalating trade dispute after China said it “will never surrender to external pressure”.

The trade war between the world’s top two economies heightened on Friday after Trump hiked tariffs on $200bn worth of Chinese goods, saying China reneged on earlier commitments made during months of negotiations.

Beijing vowed to respond to the latest US tariffs. “As for the details, please continue to pay attention,” foreign ministry spokesperson Geng Shuang told a daily news briefing on Monday, copying the US expression of “wait and see”.

Trump warned China not to intensify the trade dispute and urged their leaders to continue working to reach a deal. “China should not retaliate — will only get worse,” he said on Twitter.

“I say openly to President Xi [Jinping] & all of my many friends in China that China will be hurt very badly if you don’t make a deal because companies will be forced to leave China for other countries,” Trump wrote.

Global equities fell on Monday as hopes of an imminent trade deal were crushed.

The Republican US president last week also ordered US trade representative Robert Lighthizer to begin imposing tariffs on all remaining imports from China, a move that would affect an additional $300bn worth of goods.

Asked about the threat, Geng said: “We have said many times that adding tariffs won’t resolve any problem … we have the confidence and the ability to protect our lawful and legitimate rights.”

Chinese state media kept up a steady drumbeat of strongly worded commentary on Monday, reiterating that China’s door to talks was always open, but vowing to defend the country’s interests and dignity.

In a commentary, state television said the effect on the Chinese economy from the US tariffs was “totally controllable”.

“It’s no big deal. China is bound to turn crisis to opportunity and use this to test its abilities, to make the country even stronger.”

Before high-level talks last week in Washington, China tried to delete commitments from a draft agreement that Chinese laws would be changed to enact new policies on issues from intellectual property protection to forced technology transfers. That dealt a major setback to negotiations.

Trump has since defended the tariff hike and said he was in “absolutely no rush” to finalise a deal.

White House economic adviser Larry Kudlow said on Sunday there was a “strong possibility” Trump will meet Jinping at a Group of 20 summit in Japan in late June.