U.S. President Donald Trump's latest tariff hike on Chinese goods took effect Friday and Beijing said it would retaliate, escalating a battle over China's technology ambitions and other trade strains.
China's Commerce Ministry said in a short statement that it hoped the USA could meet China halfway and resolve the issue through cooperation and consultation.
China's Commerce Ministry confirmed the latest United States tariff increase on its website.
Trump has said tariffs will be raised on $200 billion in Chinese products from 10% to 25% starting Friday. Trump complained Beijing was trying to backtrack on earlier agreements.
For example, a recent study by economists at the Federal Reserve and the University of Chicago found Americans are spending an extra 86 US dollars a year on washing machines, due to recently imposed tariffs. The spokesman, Gao Feng, said later that Beijing has the "determination and ability to defend its own interests". Earlier, Germany's DAX index shed 1.7% and France's CAC 40 lost 1.9%.
Asian stocks were down overnight, with Japan's Nikkei 225 retreating almost 1 percent and Hong Kong's Hang Seng down 2.4 percent. The goods trade deficit increased 0.7 percent to $72.4 billion in March.
Before this week's acrimony, both sides said negotiations were making progress, which helped to stabilize financial markets.
But he held out hopes of salvaging a deal.
FILE - Chinese Vice Premier Liu He, right, gestures as U.S. Treasury Secretary Steven Mnuchin, center, chats with his Trade Representative Robert Lighthizer before their meeting in Beijing, May 1, 2019. And he has renewed his threat to extend the tough tariffs to all products the U.S. imports from China.
Ahead of the discussions, Mr Trump accused China's leaders of breaking the deal the U.S. was negotiating on trade.
Trump announced on Thursday that he received a "beautiful" letter from China's president that suggested that China and the United States "work together" to reach a deal over trade between the two nations.
He also said he would go further and slap 25 percent tariffs on another $325 billion in Chinese imports, covering everything China sells in the United States.
"We hope the USA can meet China halfway, take care of each others' concerns, and resolve existing problems through cooperation and consultations", he told a news briefing. "China has made preparations to respond to all kinds of possible outcomes".
"Those are all U.S. companies who are suddenly facing a 25% increase in cost, and then you have to remember that the Chinese are going to retaliate".
Chinese leaders see industry development directed by the Communist Party as a path to prosperity and global influence.
"China is not afraid of conflict", said the Global Times, a newspaper published by the ruling Communist Party's People's Daily that is known for its nationalist tone.
"It was way past time to confront China on many of these problems", said Michael Wessel, a member of the congressionally created U.S. Even worse, the price went up to 92 USA dollars for dryers, which are not subject to the tariffs, because the price increase was masked by the rise in the price of dryers. President Trump has pledged to broaden tariffs even further to all Chinese imports - including big ticket items.
Automakers and competitors in other industries are also required to work through joint ventures with state-owned local partners that can not function unless the foreign company supplies technology and teaches a potential Chinese competitor to develop its own.
The Philadelphia chip index declined 2.89 per cent, also pressured by a modest profit growth forecast from Intel.