BEIJING/WASHINGTON--A U.S.-China trade fight resulting in duties on $34 billion worth of each other's imports was seen dragging on for a potentially prolonged period, as Washington and Beijing flexed their muscles with no sign of negotiations to ease tensions.
Friday marked the start of the U.S. duties that were promptly met with retribution by China, as Beijing accused the United States of triggering the "largest-scale trade war."
The escalating fight between the world's two biggest economies meant that it could "take economic and political pain to get these two parties to the (negotiating) table," said Scott Kennedy, head of China studies at the Center for Strategic and International Studies in Washington.
President Donald Trump already is threatening additional rounds of tariffs, possibly targeting over $500 billion worth of Chinese goods, or roughly the total amount of U.S. imports from China last year. It will take weeks to months for the U.S. Trade Representative to review and possibly activate any new rounds of punishment.
"The key questions during that time are what will happen to financial markets, how will U.S. voters react and will China's economy start to wobble," Kennedy said in a telephone interview.
Erin Ennis, senior vice president of the U.S. China Business Council, said there was a danger the two sides will dig in on trade sanctions, without a clear strategy for resuming negotiations. While U.S. companies doing business in China agree with Trump's complaint about Chinese intellectual property practices, Ennis said they do not see tariffs pushing China into submission.
China's commerce ministry said it was forced to retaliate, meaning imported U.S. goods including cars, soybeans, and lobsters also faced 25 percent tariffs.
Some of Trump's fellow Republicans in the U.S. Congress lashed out at his actions. "Tariffs not only hurt our farmers, ranchers and airplane manufacturers, but they also harm every American consumer. We should be working with our allies to isolate China rather than escalate a trade war," said Senator Jerry Moran, who represents the agriculture-heavy state of Kansas.
China's soymeal futures fell more than 2 percent on Friday afternoon before recovering most of those losses, amid initial market confusion over whether Beijing had actually implemented the tariffs, which it later confirmed it had.
Friday's long-expected China tariff volley fuelled fear that a prolonged and escalating battle would hurt global trade, investment and growth, while also damaging U.S. farm exports and potentially driving up food prices in China. For example, U.S.-based audio company Sonos Inc, in an initial public offering on Friday, noted its performance "may be materially harmed" by trade restrictions.
"Trade war is never a solution," Chinese Premier Li Keqiang said at a news briefing with Bulgarian Prime Minister Boyko Borissov in Sofia before a summit with 16 central and eastern European countries. "China would never start a trade war but if any party resorts to an increase of tariffs, then China will take measures in response to protect development interests."
In the run-up to Friday, there was no sign of renewed negotiations between U.S. and Chinese officials, business sources in Washington and Beijing said.
The dispute has roiled financial markets including stocks, currencies and the global trade of commodities from soybeans to coal in recent weeks. China lodged a case with the World Trade Organisation (WTO) against the United States, its commerce ministry said on Friday.
