China warned the United States on Thursday that upping the ante in a tit-for-tat trade war will “only serve to disappoint” the world as Washington threatened to raise the tariff rate on the next $200 billion of Chinese imports.

Beijing said it would be forced to take countermeasures to defend Chinese interests, free trade and the international order.

“The US has no regard for the world… playing both soft and hard ball with China will not have any effect, and only serve to disappoint the countries and territories opposed to a trade war,” China’s Ministry of Commerce said in a statement, adding that it still hopes to turn the situation around.

Foreign ministry spokesman Geng Shuang called Washington’s actions “blackmail” and urged the United States “to return to rationality and not act on impulse. It will only hurt themselves.”

President Donald Trump asked the US Trade Representative to consider increasing the proposed tariffs to 25 percent from the planned 10 percent, USTR Robert Lighthizer said on Wednesday.

“We have been very clear about the specific changes China should undertake. Regrettably, instead of changing its harmful behaviour, China has illegally retaliated against US workers, farmers, ranchers and businesses,” Lighthizer said in a statement.

Officials, however, downplayed suggestions the move was intended to compensate for the recent decline in the value of the Chinese currency, which has threatened to take much of the sting out of Trump’s tariffs by making imports cheaper.

The US dollar has been strengthening since April as the central bank has been raising lending rates, which draws investors looking for higher returns.

“It’s important that countries refrain from devaluing currencies for competitive purposes,” a senior administration official told reporters. “But I wouldn’t draw the conclusion that the announcement we’re making today is directly linked to any one practice.”

Washington and Beijing are locked in battle over American accusations that China’s export economy benefits from unfair policies and subsidies, as well as theft of American technological know-how.

Trump has threatened to slap tariffs on virtually all of China’s exports to the United States.

Officials said they remained in regular contact with their Chinese counterparts but could announce no new meeting.

Boxed into a corner?

The US already imposed 25 percent tariffs on $34 billion in Chinese goods, with another $16 billion to be targeted in coming weeks.

On July 10, Washington unveiled a list of another $200 billion in Chinese goods, from areas as varied as electrical machinery, leather goods and seafood, that would be hit with 10 percent import duties.

Increasing the rates to 25 percent could make them significantly more painful.

The comment period on the proposed penalties, which includes public hearings where business can ask for exemptions, due to take place later this month, would be extended into September, the officials said.

Much of American industry and many members of Trump’s own Republican Party have expressed outrage but have so far been unable to thwart Trump’s trade policies.

The US Senate last week passed legislation which if enacted would lower trade barriers on hundreds of Chinese imports.

Jake Colvin, vice president of the National Foreign Trade Council, said the Trump administration could be boxing itself into a corner.

“It’s hard to see how this action lends itself towards a resolution to what is increasingly a trade crisis,” he told AFP.

Trump and senior administration officials believe the volume of US imports and vigorous health of the American economy give Washington an advantage in the current confrontation.

But Fred Bergsten, founding director of the Peterson Institute for International Economics, told CNBC that China would be able to absorb blows more easily than Washington.

“They can expand their stimulus, fiscal spending, bank lending,” he said.

“They can compensate much better than we can. They come from a much higher base.”

And Bergsten warned that the US economy is likely to slow and a trade war only makes that expected decline worse.

AFP

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