Trump Predicts China Will Be First to Buckle in Trade Dispute

US President Donald Trump | AP

The tit-for-tat tariffs between the world's two largest economies follows a United States finding that China was engaging in unfair trade practices in connection with intellectual property protections. "Great future for both countries!" the president tweeted.

The intensifying trade confrontation has wreaked havoc on Wall Street.

China retaliated by unveiling planned levies on $50 billion worth of major USA exports including soybeans, cars and small aircraft.

"We call on the global business community including the United States industrial and commercial circles to take prompt and effective measures and urge the USA government to correct its errors", said state newspaper People's Daily.

White House economic adviser Larry Kudlow on Sunday downplayed the prospect of a trade war, saying no USA actions have actually been taken yet. Kudlow said tariffs have only been proposed, and are now undergoing a public preview process; no final decisions have been made.

"No president has had the backbone to take it up publicly before", Larry Kudlow, the new chairman of the National Economic Council, said on CNN'S "State of the Union". Another administration official, Treasury Secretary Steve Mnuchin, takes a different tack, saying he's "cautiously optimistic" that before any threatened tariffs go into place the two nations will reach an agreement. During an address to a Chinese government-hosted forum on Hainan island, Mr Xi's challenge will be to outline bold new economic reforms and measures to open markets without appearing to bend to United States pressure on trade. "We're moving forward on a measured way with tariffs, with investment restrictions", Navarro added. The Dow Jones closed 572 points down on Friday, while the tech-heavy Nasdaq was down 2.2 per cent.

In a hastily arranged press conference held just before U.S. markets opened on Friday morning, a Chinese commerce ministry spokesman vowed that "under this backdrop [of United States threats] China will not negotiate".

U.S. Rep. Joe Crowley, D-N.Y., told Fox News Sunday he doesn't oppose tariffs on China, but Trump's approach looks like "chaos", and has "left a lot of Americans with uncertainty". China rarely inflames sensitive issues in public. The Chinese are pursuing a legal challenge at the World Trade Organization, claiming the United States is discriminating against Chinese goods.

The tweet comes just a few days after Trump asked American officials to identify tariffs on another $100bn (£71.3bn) worth of Chinese imports "in light of China's unfair retaliation", escalating the ongoing trade battle between the world's two largest economies.

Hours later, China responded with plans for up to $3 billion of tariffs on US goods.

The U.S. list of affected Chinese products had included high-tech items in areas like aerospace and pharmaceuticals, while China had proposed new levies on U.S. products like soybeans and whiskey.

Mr Trump's latest threat, issued via a formal White House statement rather than a casual tweet, has raised the stakes dramatically for Mr Xi as he prepares to address hundreds of Chinese and worldwide dignitaries, financiers and captains of industry at Bo'ao.

He added that he and China's President Xi Jinping "will always be friends, no matter what happens with our dispute on trade". He's got to show he's ready to retaliate against USA trade threats while demonstrating China's commitment to opening up. The U.S. sold about $130 billion in goods to China in 2017 and faces a potentially devastating hit to its market there if China responds in kind.

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