China vows to retaliate as US hikes tariffs on Chinese goods

LONDON: The US is set to increase tariffs on Chinese goods worth $200 billion on Friday, in a sharp escalation of their damaging trade war.

Tariffs on those Chinese goods will more than double to 25% at 04:01 GMT, and Beijing has vowed to retaliate.

The move comes as high-level officials from both sides hold trade talks in Washington.

Only recently, the two sides appeared to be nearing a deal to end months of hostilities.

The 10% duties on $200bn worth of Chinese products – including fish, handbags, clothing and footwear – were due to rise at the start of the year.

Even though Mr Trump has downplayed the impact of tariffs on the US economy, the rise will deal a blow to some American companies and consumers as firms may pass on some of the cost, analysts said.

Deborah Elms, executive director at the Asian Trade Centre said: “It’s going to be a big shock to the economy.

“Those are all US companies who are suddenly facing a 25% increase in cost, and then you have to remember that the Chinese are going to retaliate.”

The Chinese have said they will hit back with “necessary countermeasures”. In the past, Beijing has responded immediately to new tariffs imposed by the US on Chinese goods.

The move would mark a sharp escalation of the US-China trade war which has weighed on the global economy over the past year.