US president tells rally China ‘broke the deal’ and publishes list of imported products that will face higher tariffs from Friday

Donald Trump has accused China of “breaking” a deal it had reached in trade talks with the US, as the two countries moved to within 36 hours of a full-scale trade war and the US trade representative’s office filed the formal paperwork needed to increase duties on $200bn (£153bn) of Chinese goods.

Speaking at a rally in Florida on Wednesday night, the US president said: “By the way, you see the tariffs we’re doing? … Because they broke the deal. They broke the deal. So they’re flying in, the vice premier tomorrow’s flying in – good man – but they broke the deal. They can’t do that, so they’ll be paying.”



The president added: “If we don’t make the deal, nothing wrong with taking it over $100bn a year – $100bn, we never did that before.”

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Beijing said it would be forced to impose “necessary countermeasures” if the increases take effect on Friday, though it gave no details of what that would entail. “China deeply regrets that if the US tariff measures are carried out, China will have to take necessary countermeasures,” said the commerce ministry in a statement.

The last-minute sparring came after Washington published a list of imported products that will face higher tariffs from Friday.

Trump earlier held out the prospect that China would make concessions at an 11th-hour meeting in Washington but financial markets – unsettled by the most serious threat of protectionism since the 1930s – were downbeat about a breakthrough. China has threatened to retaliate against any step up in US action.

Trump escalates trade war with China with plan to raise tariffs Read more

Share prices have been rising since the turn of the year on hopes that the world’s two biggest economies would settle their differences.

But the mood has darkened in the past week after the Trump administration accused Beijing of backtracking on measures the US believed had been agreed. These included addressing issues such as the theft of US intellectual property and trade secrets; the forced transfer of technology; competition policy; access to financial services and currency manipulation.

After a fall of almost 500 points on Tuesday, the Dow Jones industrial average closed with little change on Wednesday but the jittery mood led to investors seeking out traditional safe havens such as gold.

Washington said China was seeking to renege on its commitments, rendering the 150-page draft agreement worthless. The US trade representative, Robert Lighthizer, has been insisting China make changes to its domestic laws to prove it would not renege on the deal.

But the US found in each of the seven chapters of the draft trade deal, China had deleted commitments, raising doubts in Washington about whether Beijing would comply. As a result, Trump has said he will end the moratorium on higher tariffs on Chinese imports that has been in place since a truce was called at the end of 2018.

The US president said he hoped a Chinese delegation – due to arrive in the US on Thursday and led by vice-premier Liu He – would do a deal in this week’s talks but also made it clear Washington was prepared to ratchet up tariffs.

Trump tweeted: “The reason for the China pullback & attempted renegotiation of the Trade Deal is the sincere HOPE that they will be able to “negotiate” with Joe Biden or one of the very weak Democrats, and thereby continue to ripoff the United States (($500 Billion a year)) for years to come.

“Guess what, that’s not going to happen! China has just informed us that they (Vice-Premier) are now coming to the US to make a deal. We’ll see, but I am very happy with over $100 Billion a year in Tariffs filling U.S. coffers...great for U.S., not good for China!”

Q&A What is the China-US trade war about? Show Hide The roots of the dispute come from US president Donald Trump’s “America first” project to protect the US’ position as the world’s leading economy, while encouraging businesses to hire more workers in the US and to manufacture their products there. Trump complains of a large trade deficit with China, which he views as a symbol of the US’s decline as a manufacturing powerhouse. Chinese imports to the US totalled $539.5bn last year, while $120.3bn was sold the other way – leaving a trade deficit of $419.2bn. The president has accused Beijing of “unfair” trade policies, including allowing the theft of US companies’ intellectual property. The threat of import tariffs on Chinese goods is being used as leverage in talks where Trump is seeking changes to Beijing’s trade policy. Tariffs have been imposed by Washington on some Chinese goods sold in the US for about a year. They came on top of broader tariffs used by Trump that have hit China and other trading partners such as the EU, Canada and Mexico, on goods including steel and aluminium. In May 2019 the US president further ratcheted up existing import tariffs of 10% on $200bn (£153bn) of Chinese goods sold in the US to 25%, hitting everything on a long list of products. Trump has previously warned that 25% tariffs could be slapped on a further $325bn of goods – which would mean all Chinese imports being covered by tariffs. However, talks in November 2019 aimed at easing tensions were welcomed as the beginning of a thaw in the trade war between the two nations. Richard Partington and Jasper Jolly

Thousands of Chinese products, including fruit, vegetables and manufactured goods, would be affected by a decision to raise tariffs, while the US has indicated that it would also be prepared to target the $325bn of imports that are not subject to higher duties.

Analysts said any escalation in the trade war would hurt China more than the US. Jennifer McKeown, of Capital Economics, said goods exports to the US accounted for 3.2% of China’s national output, while exports to China made up only 0.6% of US gross domestic product. So far, McKeown added, tariffs had knocked 0.4 points off China’s growth and 0.2% off US growth.

“We think that the direct effect of an increase in the tariff on the $200bn list to 25% would be to hit Chinese GDP by around another 0.1 percentage points. If the 25% tariff were extended to the rest of Chinese exports to the US that might knock a further 0.3 percentage points off GDP. The effects on the US would probably be minimal, due to the lesser importance of trade with China and the fact that China would struggle to retaliate as it is running out of imports to tax.”

Liam Fox, the UK’s trade secretary, said he understood the Trump administration’s frustration with China over issues such as forced technology transfers and the dumping of goods on global markets but the dispute would be better solved through the multilateral system.