The U.S. slapped additional tariffs on Chinese goods on Friday even as the two sides agreed to keep talking, raising fears that the global economy will suffer.
The tariffs, which were lifted to 25% from 10%, apply to more than 5,700 categories of Chinese imports worth around $200 billion. Many consumer products, such as food and electric appliances, will be hit. The higher duties may push prices up, denting U.S. consumer spending.
Shortly before the duties were levied, a White House spokesperson said negotiations between the two sides would continue on Friday morning local time.
The higher duty applies only to exports sent on or after May 10, according to a notice published in the Federal Register by the Office of the U.S. Trade Representative. This contrasts with previous tariff rounds that also hit shipments already in transit.
The affected goods include items that can take two to four weeks to arrive by sea, such as appliances and furniture, meaning that the hike’s full impact will likely take some time to be felt. This leaves some room for negotiations that could potentially head off the worst of the damage.
In a short statement, China’s Commerce Ministry said it “deeply regrets” the U.S. decision and that it “will have to take necessary countermeasures.” It also expressed hopes that the two sides can resolve the issue.
The reaction on Asian Stock markets was mixed.
About an hour after the tariff rate went up, Shanghai’s SSE Composite Index was 1.5% higher than Thursday’s close. In Hong Kong, the Hang Seng Index was also up, by 0.64%. Some investors were optimistic that the talks will lead to an improved situation.
In Japan, fear of the global economy being negatively impacted sent the Nikkei average on the Tokyo Stock Exchange down by 0.77 %. South Korea’s main gauge was also down, by 0.27%.
Chinese Vice Premier Liu He arrived at the U.S. Trade Representative’s office around 5 p.m. Washington time on Thursday and was greeted by lead American negotiator Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin.
Ahead of the talks, U.S. President Donald Trump said he had received a letter from Chinese President Xi Jinping, and that he would likely speak to his counterpart by phone.
“He just wrote me a beautiful letter. I just received it, and I’ll probably speak to him by phone,” Trump told reporters at the White House.
He said that in the letter Xi had called to “work together” and see “if we can get something done.”