Trade War Escalates as China Hits US with Tariffs on $3 Billion of Exports

Tensions are escalating Monday between the US and China in an ongoing dispute over trade and industrial policy, with China continuing to raise import duties on American products.
    
Chinese President Xi Jinping says he is responding to a US tariff hike on steel and aluminum.

The US, Europe, and Japan insist China's economic model hampers market access, protects Chinese companies and subsidizes exports, thus violating Beijing's free-trade commitments.

Meanwhile, China's Finance Ministry noted the US tariff hike has "has seriously damaged our interests."

"Our country advocates and supports the multilateral trading system," the Finance Ministry said in a statement, adding that China's tariff increase "is a proper measure adopted by our country using World Trade Organization rules to protect our interests."
    
So far, the country has raised import duties on a $3 billion list of US pork, apples, nuts and other products.

The tariff increase is expected to hit America's farm states the hardest.

Chinese officials have expressed willingness to negotiate, but insist they won't back down should the US refuse to end its trade war with their country.

"China has already prepared for the worst," said Liu Yuanchun, executive dean of the National Academy of Development Strategy at Renmin University in Beijing. "The two sides, therefore, should sit down and negotiate."

Commerce Ministry spokesperson Gao Feng warned last week, "We hope the United States can rein in its horse before the edge of the cliff, or else we will fight to the end."

Forecasters predict the impact from Monday's tariff hike by China should be limited.

Still, they note investors are concerned global recovery might be set back if other governments respond by raising import barriers.