US President Donald Trump announced Thursday he will hit China with punitive tariffs on another $300 billion in goods, prompting Beijing to warn it was the wrong way to resolve the trade war.

The sudden deterioration meant the world's two largest economies have now erected trade barriers covering virtually all of their $660 billion in annual trade in merchandise -- confirming economists' fears and sending shudders through Wall Street.

The 10 percent duties will take effect September 1, and come on top of the 25 percent tariffs on $250 billion in imports already in place.

He later raised the possibility he could increase the duties further.

"The 10 percent is... for a short-term period and then I can always do much more or I can do less, depending on what happens with respect to a deal," Trump said at the White House, adding, "it could be lifted up to well beyond 25 percent."

After resuming face-to-face talks in Shanghai this week, trade negotiators were set to reconvene in Washington in early September for another round of discussions, which means they will take place just after the new tariffs take effect.

"Slapping on tariffs is definitely not a constructive way to resolve economic and trade frictions, it's not the correct way," Chinese Foreign Minister Wang Yi said in brief remarks on the sidelines of a regional meeting of top diplomats in Bangkok on Friday.

China has yet to say whether and how it will retaliate, but it has hinted in recent months that it could restrict exports of rare earths, which are vital to the US tech industry, and it is also working on a blacklist of "unreliable" companies that could target US firms.

When he announced the tariffs on Twitter, Trump said Beijing had agreed "to buy agricultural product from the US in large quantities but did not do so."

"Additionally, my friend President Xi said that he would stop the sale of fentanyl to the United States -- this never happened, and many Americans continue to die!" Trump said, referring to the highly potent and addictive opioid.

Trade relations with China have swung between progress and disaster, appearing to collapse in May only to be revived two months later after a meeting in Japan between Trump and Xi Jinping, his Chinese counterpart.

The leaders declared a truce at that meeting in late June, but the new tariffs make good on a threat Trump made in May.

"The core motivation is the talks clearly weren't going to go anywhere without more pressure on the Chinese," said Derek Scissors, an expert on US-China economic ties at the American Enterprise Institute, a conservative think tank.

"Of course, they could react badly now and the talks could end entirely. It's a measured risk," he told AFP.

- 'Not concerned' -

In prior tariff rounds, US officials had worked to prevent the higher costs from hitting popular consumer items.

But the new duties coming just before the holiday shopping season, will cover the vast expanse of everyday Chinese-made goods and consumer electronics -- mobile telephones, baby carriages, tampons, watches and toys.

Trump has falsely claimed China pays for his mounting tariffs. But Democrats in Congress and business groups say the measures are taxing ordinary consumers and making household goods more expensive.

While other parts of the US economy have begun to slow, the dominant retail sector has been a bright spot, helping to bolster growth despite the general slowdown in most other industrialized nations.

Industries as varied as fashion and oilfield services had pleaded with the Trump administration to hold fire, warning of layoffs, lost markets and fading industrial dominance.

Wall Street dove into the red following Trump's announcement, with retailers hit particularly hard. The Dow Jones Industrial Average was closed down more than one percent.

Despite the red arrows on Wall Street, Trump remained upbeat.

"I'm not concerned about that at all," he told reporters. "I expected that."

Washington accuses China of using a state-directed economic model, unfairly subsidizing production and stealing US technology.

But economists say the trade war has increasingly undermined the global manufacturing sector and sapped business sentiment, threatening the world's economy at a time when it is already on the wane.

Latest Trump tariffs to directly hit consumers
New York (AFP) Aug 1, 2019 - Earlier US tariffs enacted in President Donald Trump's trade war with China have dealt only a glancing blow to consumers, but those announced Thursday are different.

"This hits consumers straight on," Steve Pasierb, president of the Toy Association, said in an interview. "This is finished products. It's not raw materials."

The tariffs, a 10 percent levy on $300 billion in Chinese goods that Trump said would go into effect on September 1, is expected to affect just about all finished products imported from China.

Items that will likely have a levy include hairdryers, sneakers, flat screen televisions, bridal wear and other special occasion apparel.

The prospect of such broad-based tariffs has loomed over retailers for months and has been referred to as the "boogeyman" outcome by some in consumer-facing industries.

"It's very unfair to the American consumer. It's very unfair to the manufacturer and it shouldn't be happening," said Stephen Lang, chief executive of Mon Cheri Bridals in New Jersey and the head of the American Bridal & Prom Association.

Lang said that a 10 percent levy was less onerous than the 25 percent tariff that has been discussed and which he has previously described as catastrophic.

But Trump said Thursday he could lift the levy to "well beyond 25 percent," referring to the 10 percent level as "for a short-term period."

"We have too much testosterone between this government and their government, and we're getting caught in the crossfire," Lang said.

- Retail shares hit -

Leading trade groups criticized the announcement.

"We support the administration's goal of restructuring the US-China trade relationship. But we are disappointed the administration is doubling down on a flawed tariff strategy," said National Retail Federation senior vice president David French.

"These additional tariffs will only threaten US jobs and raise costs for American families on everyday goods."

"Retaliatory tariffs, whether 10 percent or 25 percent, are bad policy," said Gary Shapiro, president of the Consumer Technology Association. "Tariffs are taxes paid for by US consumers, not China's government. These retaliatory tariffs are not an effective trade policy and may violate US law."

Shares of retailers fell sharply Thursday, with the biggest drops affecting a group that included Best Buy, Target and Macy's. Others to decline included Apple and Nike.

Retail giants Amazon and Walmart also dipped, but by less than most of their rivals because they are viewed as having more leverage with suppliers.

During an earnings conference call in May, Walmart Chief Financial Officer Brett Biggs said the company's merchant teams have been focused on tariffs "for months and continue to execute appropriate mitigation strategies," as he warned that some pricing impact was inevitable.

"We're going to continue to do everything we can to keep prices low. It's who we are," Biggs said. "However, increased tariffs will lead to increased prices for our customers."

Best Buy declined to comment Thursday, but argued against tariffs during a public comment period in June.

In a letter to United States Trade Representative Robert Lighthizer, Best Buy noted that the Trump administration had previously not imposed tariffs on flat screen televisions, laptops and other consumer items.

"Best Buy respectfully submits that USTR should not impose tariffs on the above-referenced consumer economics, just as it did last year when it wisely chose to forego imposing tariffs on flat panel televisions and other consumer electronic devices because of the negative impacts on the US consumers and economy," the company said.

- Threat to economy? -

Thursday's move could threaten US consumer spending, a bedrock of support of the American and global economy that has continued to show strength in economic indicators even as manufacturing and corporate spending trends have weakened.

Pasierb of the Toy Association said the impact of the tariffs may be mitigated in his industry somewhat because many retailers have imported goods earlier this year because of tariff risk.

But broad-based tariffs are a concern "because if all these goods become more expensive, you won't have as much discretionary money for toys," he said.

"My deep concern is that this is going to hit spending in the last three months of the year, which is our make-or-break period."

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China-US trade talks to restart after G20 tariff truce
Shanghai (AFP) July 30, 2019
US negotiators arrived in Shanghai on Tuesday to resurrect trade talks with Chinese officials, with both sides downplaying expectations of an imminent deal between the world's two biggest economies. The negotiations in the financial hub will be the first face-to-face discussions since US President Donald Trump agreed to a truce with Chinese President Xi Jinping at June's G20 summit after previous talks broke down over US accusations that China reneged on its commitments. Washington and Beijing h ... read more