China has taken action against the US for piling more taxes on Chinese goods, by introducing new tariffs of its own.
Beijing said on Monday that it will increase taxes on US$60 billion (HK$470 billion) worth of products that the US ships to China, starting on June 1.
The move comes three days after the US more than doubled taxes on US$200 billion (HK$1.6 trillion) worth of Chinese imports. It also plans to impose new tariffs on a further US$300 billion (HK$2.4 trillion) worth of Chinese items.
The two countries have been locked in a trade war since last year, when the US first started adding taxes to the products it buys from China, provoking the mainland to do the same.
They agreed to cool things in December, and there were hopes that they would reach a new trade deal, but talks ended last weeks without that happening.
US President Donald Trump warned in a series of tweets that “China should not retaliate” against the new US taxes, but Beijing responded by saying that it would “never surrender to external pressure”.
The new Chinese tariffs mean that US companies will need to pay as much as 25 per cent tax on many of the items that they export to China.
Beijing made clear that the new taxes were a response to the US’s own tax hikes.
However, by waiting until June 1 to impose them, Beijing appears to be allowing time for the two countries to find a resolution. A statement from Beijing’s state council said it hoped the US would work with China towards a “win-win agreement”.
The announcement of the new taxes caused US stocks to plummet.
Experts have warned that a trade war between the world’s two largest economies could severely damage global economic growth.