Beijing denounces Trump's 10pc tariff

China yesterday denounced the Trump administration's imposition of a long-threatened 10 percent tariff on Chinese imports while leaving the door open for talks with the US that could avoid a deepening conflict.

Beijing will challenge President Donald Trump's tariff at the World Trade Organization and take unspecified "countermeasures" in response to the levy, which takes effect tomorrow, the finance and commerce ministries said.

The response stopped short of the immediate escalation that had marked China's trade showdown with Trump in his first term as president and repeated the more measured language Beijing has used in recent weeks.

Trump on Saturday ordered 25 percent tariffs on Canadian and Mexican imports and 10 percent on goods from China, saying the measures aimed to punish countries for failing to halt flows of illegal migrants and drugs including fentanyl into the United States.

China, Canada and Mexico - American's three biggest trading partners - have all vowed to respond to the tariffs.

China's commerce ministry said Trump's move "seriously violates" international trade rules, urging the US to "engage in frank dialogue and strengthen cooperation."

Filing a lawsuit with the WTO would be a largely symbolic move that Beijing has also taken against tariffs of up to 45 percent on Chinese-made electric vehicles by the European Union.

For weeks Chinese Foreign Ministry spokesperson Mao Ning has said Beijing believes there is no winner in a trade war.

But both Republicans and Democrats have come to view China as the biggest foreign policy and economic challenge to the United States.

China's massive trade surplus - almost US$1 trillion (HK$7.8 trillion) last year - is a vulnerability for Beijing. China's exports in key industries, including autos, have been growing faster in volume than value, suggesting manufacturers are discounting to try to win overseas sales when demand at home has been sputtering.

For that reason, analysts have expected China to try to strike a deal early with Trump to soften the blow from trade action by the US.

China's economy, the world's second-largest, hit its official growth target of 5 percent last year, even as many complained of declining job prospects and worsening living standards.

Elsewhere, Canadian Prime Minister Justin Trudeau said his country would hit back with 25 percent levies of its own on select American goods worth C$155 billion (HK$831 billion), with a first round tomorrow followed by a second one in three weeks.

Mexican President Claudia Sheinbaum has also announced that her country would impose retaliatory tariffs.

Japan expressed "deep concern" about the possible repercussions of the tariffs on global trade, while South Korea yesterday ordered government agencies to closely monitor any impact of the taxes on domestic firms and the economy

And in the US, businesses are bracing to take a hit from the taxes.

Some economists have calculated the tariffs would increase inflation, which was running at a 2.9 percent annual rate in December, by 0.4 percentage points this year, and that the US economy, which grew 2.8 percent last year, would fall by 1.5 percent this year and 2.1 percent next year "as higher import costs dampen consumer spending and business investment.''

Experts estimate that Trump's tariffs would cost the average American household US$1,000 to $1,200 in annual purchasing power.

Trump has repeatedly expressed his approval of tariffs as a policy measure, and has signaled that Saturday's action could be the first volley in further trade conflicts to come. He also pledged to impose future duties on the EU and has promised tariffs on semiconductors, steel, aluminum, oil and gas.

Agencies