S&P 500 futures tumble as U.S.-China trade fears escalate

U.S. President Donald Trump and Chinese President Xi Jinping meet after the G20 in Buenos Aires

Tense future for US-China ties, with or without trade deal

The next escalation could come within weeks, as US regulators prepare to follow through on Trump's threat to extend penalty tariffs to all Chinese goods.

US President Donald Trump and China's Xi Jinping could meet next month on the sidelines of the G20 summit to hash out their differences on trade, but no new talks are scheduled, White House economic advisor Larry Kudlow said.

"We need to see something much clearer and until we do, we have to keep our tariffs on", Kudlow said in an interview on "Fox News Sunday", adding: "We can't accept any backtracking".

Kudlow broke with the president's long term, official line that Chinese exporters pay tariffs, however, a claim which has long since been debunked: tariffs are paid by importers to release a product from the dock at which they enter a country.

That dispute grew out of an earlier deadlock over how and when to remove existing American tariffs that provoked Beijing to threaten quit the talks, people briefed on the discussions said.

The trade war is stirring nationalist sentiment in China.

"China has not only the determination and capability, but also willingness to fight a prolonged war", Wei said.

"China will never surrender to external pressure", foreign ministry spokesman Geng Shuang said at a regular briefing on Monday.

The tariffs war has been hammering Chinese manufacturers and is an added drag on growth for the region.

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In a remarkable break from his boss' rhetoric, President Donald Trump's chief economic adviser Larry Kudlow conceded that U.S. businesses and consumers are the ones who have to pay up for the hike in Chinese import taxes. These often pass on the costs to customers, mostly manufacturers and consumers in the United States.

The US argues that China's trade surplus with the US is the result of unfair practices, include state support for domestic companies.

But he also assured that because the United States economy "is in a boom", it would not be damaged "in any appreciable way" by the tariffs. Beijing wanted to delete prior commitments that Chinese laws would be changed to enact new policies on issues from intellectual property protection to forced technology transfers.

Kudlow also said the U.S.is awaiting retaliation from China over the increased tariffs, after talks in Washington ended on Friday without a deal. "We may know more today or even this evening or tomorrow".

"We have to have a very strong agreement", he said, "to correct, to right these wrongs before we will be satisfied".

When Chinese companies pay tariffs to export products to the USA, their American customers typically absorb the expense in the form of higher prices. The two countries have been at odds since last summer when Trump implemented billions of dollars of tariffs on Chinese goods.

Lighthizer said a final decision on that has not yet been made but it would come on top of the Friday tariff rate increase to 25% from 10% on $200 billion worth of Chinese imports.

"We're in the middle of this and the president is playing a negotiating battle with the Chinese and I think he feels that at this point they can't really back out", he said on ABC's "This Week".

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