China rejects ‘blackmail’ on eve of U.S. tariff hike

The European Union Mexico and Canada have all the hit U.S. with billions in retaliatory tariffs

The European Union Mexico and Canada have all the hit U.S. with billions in retaliatory tariffs

The Chinese government is "fully prepared to take a package of necessary measures" to safeguard its national interests if a full-blown trade war breaks out between the world's two biggest economies, said foreign ministry spokesman Lu Kang.

Steep American tariffs on Chinese goods worth tens of billions of dollars are due to take effect when the clock strikes twelve on Thursday night, as US President Donald Trump fires the first salvo in a trade war between the world's top two economies.

As much as US$20 billion of $34 billion Chinese goods on which United States will implement a 25-per-cent tariff beginning Friday are produced by foreign companies, including American companies, China's Commerce Ministry spokesman Gao Feng said at a regular press conference in Beijing.

Asked whether US companies would be targeted with "qualitative measures" in China in a trade war, Gao said the government would protect the legal rights of all foreign companies in the country.

"On the US's so-called list of $34 billion in taxable products, about $20 billion or 59 percent of them, are made by foreign invested enterprises, with American companies representing a significant portion", said Gao.

"US measures are essentially attacking global supply and value chains".

China rejected "threats and blackmail" ahead of planned US tariff hike, striking a defiant stance Thursday in a dispute companies worry could flare into a full-blown trade war and chill the global economy.

"China will not bow in the face of threats and blackmail", added Mr Gao.

Mercedes-maker Daimler, and BMW Porsche and Volkswagen raced up as much as 5 per cent after a newspaper report about a usa offer to suspend tariff threats on EU-made cars if the bloc lifts its duties on us ones.

The overnight slide in Asian markets, in particular Chinese shares which are now deep into "bear" market territory, highlighted the ongoing angst over U.S. President Donald Trump's trade tariff plans.

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"It's a dark day tomorrow for global trade", predicted Joerg Wuttke, former president of the European Union Chamber of Commerce in China. "China has already made preparations".

One U.S. manufacturer said Chinese authorities on average used to inspect 2 percent of the vehicles it sent overseas.

China's yuan rose sharply against the dollar on Wednesday, a day after the central bank assured markets it would keep the currency stable amid growing worries about trade friction, although stocks fell.

"But the country will encounter more barriers in future development, to which we should learn to adapt", it said.

USA markets are closed for Independence Day following a move lower on Tuesday.

Xi's government has expressed confidence China can hold out against US pressure, but companies and investors are uneasy.

Is a US-China trade war on the horizon?

A United States industry source said: "There is a 99 per cent chance that tariffs go into force on Friday".

"Frankly, I don't know what action China could take at the moment that would allow the not impose tariffs", the USA source said, adding that there was no evidence the two governments had any substantive engagement at the moment that could lead to the shelving of duties.

Trump has threatened to impose new taxes on up to $416 billion worth of goods in coming months if China doesn't meet his trade demands.

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