China prepares to retaliate against surprise US tariffs

China lashed out against the surprise statement from the White House overnight on Tuesday saying it will go ahead with tariffs and restrictions on Chinese imports and block investments in sensitive technologies.

That prompted an angry response from China's Commerce Ministry, which said it was ready to fight if Washington wanted to start a trade war, Reuters reported on Wednesday.

On Tuesday, Washington announced the administration would impose 25% tariffs on $50bn worth of goods from China and set limits on Chinese investments in US high-tech industries in a move to protect American intellectual property.

A final list of imports subject to tariffs will be published 15 June.

The announcement came just 10 days after both countries had put the trade war on hold while implementing a "framework" to reduce Beijing's surplus and defuse tensions, with China open to analysing ways in which it could narrow its $375bn surplus with America.

Wednesday's news came ahead of a 2- 4 June visit by US Commerce Secretary Wilbur Ross to Beijing, and just days after a speech from President Xi Jinping that emphasised the importance of building a self-sustained high-tech industry.

Analysts at ING believe the speech might have hit a nerve in the US administration: "Xi would have known that the US would react to his speech. We believe, therefore, that China is prepared to put sizeable investments into the high-tech sector to achieve its target so it doesn't need to depend on US tech products."

In a statement, China's Commerce Ministry said: "This is obviously contrary to the consensus reached between the two sides in Washington not long ago."

The Global Times said the United States "delusional" and that the 2trade renege could leave Washington dancing with itself."

"The Chinese government will have the necessary measures in place to deal with a U.S. withdrawal from any settled agreement. If the U.S. wants to play games, then China would be more than willing to play along and do so until the very end," it said.

Konstantinos Anthis, head of research at ADS Securities said: "US President Donald Trump announced his intention to impose tariffs on $50 billion of Chinese imported goods, re-escalating his trade spat with China. The continued uncertainty is forcing investors to look for safer havens with the yen, gold and US Treasuries leading the gains."

"With the re-escalation of the US-China trade traders should remain cautious and not get carried away from any early gains," he added.