While talks earlier this week between Beijing and Washington were not fruitful, a decision by the Trump administration to impose tougher tariffs could soften China's stance or escalate the trade war between the world's two biggest economies. The U.S. threat and pressure will not work.
Chinese Foreign Ministry spokesman Geng Shuang (pic) attributed the arrest of Swedish bookseller Gui Minhai to the "violation of Chinese laws", without further explanation.
Stock markets edged up globally on Tuesday on a report that the United States and China were seeking to resume talks to defuse the budding trade war.
Lighthizer told reporters on Wednesday that the additional tariffs are necessary because the original duties did not prompt China to change its trade policy.
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. China responded with tariffs on $34 billion in US goods, including a wide range of agricultural products.
"They better not underestimate the President", Mr Kudlow said in an interview on Fox Business Network.
China's government, however, shows no sign of bending to Washington's pressure.
Wednesday's move means when the latest tariffs have been introduced, the White House will have imposed levies on more than $250 billion of Chinese exports to the United States, although it has threatened to target the full $500 billion of goods that China exports to America each year.
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China has announced a plan to impose new tariffs on $60 billion of American goods, in retaliation for the latest tariff threats from the Trump administration.
According to Geng Shuang, "if the USA takes action to further escalate the situation, China will undoubtedly take the necessary countermeasures to protect its legitimate rights and interests". It said retaliatory duties of between 5 and 25 per cent will be imposed on 5,207 products "if the USA side persists in putting its tariff measures into effect".
Many U.S. ports, both air and sea, are witnessing record import volumes.
The US Senate last week passed legislation which if enacted would lower trade barriers on hundreds of Chinese imports.
Trump recently threatened to slap punitive tariffs on all Chinese exports to the USA, which amounted to more than $500 billion previous year.
"China has been fully prepared and will have to retaliate to defend national dignity and the people's interests", the Commerce Ministry said in a statement Thursday.
It's the same story for liquefied natural gas (LNG), with only one USA cargo booked for arrival in August, and it departed the Gulf of Mexico on July 1, before much of the current escalation in the trade dispute. China immediately vowed to retaliate though at the same time urged the United States to act rationally and return to talks to resolve the dispute. A fall in exchange rates could neutralise the United States tariffs by making Chinese goods cheaper for overseas customers to buy.
Thus, keeping an eye on China's imports of major commodities in coming months will be key to working out just how quickly the trade dispute is filtering through to the real economy, and determining if the phoney trade war has become a real one.