China reserves firepower for trade battle with Donald Trump [View all]

[In It to Win It]

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China could further ratchet up pressure on American companies in retaliation for US President Donald Trump’s tariffs as it holds back some firepower for negotiations between the world’s two biggest economies in an escalating trade war.

Beijing has already hit back, increasing levies on US goods by an additional 34 per cent and taking a raft of other measures, including export bans on rare earths and an antitrust probe into the Chinese subsidiary of US chemical giant DuPont.

Unlike the previous two rounds of retaliation, which targeted specific categories of US imports, this time Beijing announced a blanket tariff increase to come into effect from April 10, a day after America’s “reciprocal” levies come into effect.

“The Chinese reaction to the first two tariff hikes was moderate and patient but we found out patience wasn’t helpful,” said Tu Xinquan, dean of the China Institute for WTO Studies at the University of International Business and Economics in Beijing.

But while the “situation is bad; it could be worse”, said Cory Combs, associate director of Beijing-based consultancy Trivium China. “Beijing has strategically left itself space to continue ratcheting up retaliation wherever US or others’ actions threaten its economic interests.”