China announced a US$ 3 billion list of U.S. goods including pork, apples and steel pipe on Friday that it said may be hit with higher tariffs in a spiraling trade dispute with President Donald Trump that companies and investors worry could depress global commerce. The Commerce Ministry urged Washington to negotiate a prompt settlement to the conflict over Trump's tariff hike on steel and aluminum but set no deadline.
Separately, the ministry also criticized Trump's decision to approve a possible tariff hike on billions of dollars of Chinese goods in a dispute over Beijing's technology policy. The ministry slammed that as trade protectionism but gave no indication how Beijing might respond.
The ratcheting up of tensions sent a shiver through world financial markets. Shares tumbled on Wall Street and slumped in Asia, where Japan's Nikkei 225 index fell 3.5% while the Shanghai Composite index slipped 3.1% and Hong Kong's Hang Seng lost 2.8%. The dollar dipped to 104.85 yen as investors shifted into the Japanese currency, which is viewed as a safe haven from risk.
China's proposed tariff hikes in response to the steel and aluminum duties appeared to be aimed at increasing domestic U.S. pressure on Trump by making clear which exporters, including farm areas that voted for the president in 2016, might be hurt.
Beijing is extending an olive branch and urging the U.S. to resolve trade disputes through dialogue rather than tariffs, said economist Vishnu Varathan of Mizuho Bank in a report. Nevertheless, the first volley of shots and retaliatory response has been set off.
The ministry said Beijing was considering a tariff increase of 25% on pork and aluminum scrap, mirroring Trump's 25% charge on steel. A second list of goods including wine, apples, ethanol and stainless steel pipe would be charged 15%, mirroring Trump's tariff hike on aluminum.
The ministry said Chinese purchases of those goods last year totaled US$3 billion. That would be less than 1% of Chinese imports of U.S. goods and far smaller than the range of imports targeted by Trump's order Thursday in the technology dispute.
American business groups have warned Trump his aluminum and steel tariffs could hurt the U.S. economy and disrupt exports. Companies worry the dispute could spiral into tit-for-tat import controls by governments worldwide that could suppress global trade.