US president says he expects to move ahead on plans to raise tariffs to 25% from 1 January

This article is more than 1 year old

This article is more than 1 year old

Donald Trump has raised the stakes in the escalating global trade dispute between the US, China and some of America’s traditional allies ahead of a major gathering of world leaders this week.

Ahead of the G20 meeting in Argentina, which begins on Friday, the US president used a newspaper interview to warn China that he expects to move ahead on the imposition of higher import tariffs on Chinese goods.

The news sent shares lower in London and New York on Tuesday, after Trump told the Wall Street Journal it was “highly unlikely” that he would heed a call by Beijing to refrain from increasing the tariffs from the start of next year.

It paves the way for the existing 10% US import tariff on $200bn (£158bn) of Chinese goods to increase to 25% from 1 January.

Economists at the Dutch lender Rabobank said the world economy could suffer badly over the next decade if the US-China trade war escalates further, with as much as 2% of GDP growth lost by 2030.

Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk

Hugo Erken, senior economist at the bank, said: “An ongoing trade war between the world’s two largest economies has much broader ramifications that transcend their own borders … in a globalised economy, there are no real winners from such policies.”

Trump, who is due to have dinner with the Chinese president, Xi Jinping, at the G20 summit, also suggested Apple products such as iPhones and laptops made in China and imported to the US could be hit, despite having so far been exempted from the tariffs.

His comments triggered a sell-off in Apple shares, putting the company on course to lose its crown as the world’s most valuable firm, with Microsoft set to take the title in its place.

Trump's trade wars and Brexit are making us all poorer | Jeffrey Frankel Read more

A series of developments in recent months have cooled the simmering trade tensions between the White House and several other countries, including the renegotiation of the North American Free Trade Agreement (Nafta) between the US, Mexico and Canada.

However, Trump has now raised the prospect of higher import tariffs on China, while downplaying the chances of a trade deal between the UK and the US should Theresa May win parliamentary support for her Brexit deal.

Washington is also investigating car imports to the US on the grounds of national security, with one potential outcome being higher tariffs on European vehicles.