The United States and China imposed fresh tariffs on each other's goods Monday as the world's two largest economies showed no sign of backing down from a bitter trade dispute that kept rattling financial markets.
China slammed the US on Monday over its "trade bullyism" after $200 billion worth of tariffs went into effect, prompting Beijing to enact retaliatory tariffs on $60 billion in American imports. China responded with similar tariffs, but only targeted $60 billion worth of USA goods in exchange.
The U.S. targeted $200 billion worth of items from China, at a rate of 10 percent.
A senior Chinese official said on Tuesday it is hard to proceed with trade talks with the United States while Washington is putting "a knife to China's neck", a day after both sides heaped fresh tariffs on each other's goods.
The remarks followed the publication of a white paper from China's State Council earlier this week that described recent U.S. actions as "trade bullyism".
Earlier, the two sides imposed 25 per cent penalties on $34 billion of each other's goods in July and another $16 billion in August.
A news report suggested that China will block any potential negotiations unless USA president Trump withdraws his threats of further tariffs on the country.
"The trade war is now a reality", Fitch chief economist Brian Coulton said in the release.
Eswar Prasad, former head of the International Monetary Fund's China division told the Washington Post: "The end game in the U.S".
The United States' changing trade policy following Donald Trump's taking office threatens the global economy as Washington is not discriminating between key allies and rivals.
China's top diplomat also told business people at a meeting in NY that talks could not take place against the backdrop of "threats and pressure", the Foreign Ministry said.
"It would look weak both to the USA and at home", he said, adding that there is "sufficient stimulus in the pipeline" to limit the damage of the latest tariffs on China's economy.
Several rounds of talks in recent months have failed to produce a significant breakthrough and fresh negotiations which had been expected in coming weeks have been cancelled after Beijing reportedly decided late last week not to send a delegation to Washington.
China imports far less from the United States, making a dollar-for-dollar match on any new USA tariffs impossible.
"Protectionist US trade policies have now reached the point where they are materially affecting what remains a strong global growth outlook", the agency said in a report Friday. Though Beijing has not revealed what such steps might be, business executives and analysts say it could withhold exports of certain products to the United States or create more administrative red tape for American companies operating in China.
Still, China has other methods of retaliation open to it.