Trade deficit at $75.6 billion, highest since '08

Chinese foreign minister Wang Yi

Chinese foreign minister Wang Yi

Meanwhile, Japan and South Korea have also reacted sharply to U.S. President Donald Trump's decision to impose tariffs on steel and aluminum imports.

In Beijing, Foreign Minister Wang Yi said China and the United States did not have to be rivals, and history showed that trade wars were not the correct way to resolve problems.

Chinese leaders have threatened in the past to retaliate if Trump raises trade barriers, but now need to weigh whether to back up those threats with action and risk jeopardizing US market access for smartphones and other exports that matter more to their economy than metals. It doesn't want to be seen as weak.

"Many said they feared tit-for-tat retaliation which could spiral out of control, damaging the global economy and the multilateral trading system", WTO spokesman Keith Rockwell said. Instead, the USA appears ready to go ahead with tariffs and protectionist practices that already have key United States allies and partners seeking help from the World Trade Organization and threatening trade wars.

The politically sensitive goods trade deficit with China surged 16.7 percent to $36.0 billion, the highest since September 2015.

Most countries would benefit, on the other hand, from stronger protections against Chinese intellectual property theft.

Trump is pressing to implement campaign promises of hardening the US stance on trade.

Chinese officials have appealed to the White House since last March to avoid hurting both sides by disrupting aluminum trade. President Donald Trump has approved higher tariffs on Chinese-made washing machines and some other goods and is considering other possible controls.

The research house expects US steel to end 2018 at $700 per ton, up from $476 a ton before Trump was elected in October 2016, but believes Chinese prices won't be hit because the its steel exports to the United States have collapsed. "We must act soon!"

Mizuho analysts, on the other hand, are less concerned by the potential for commodities duties, but view potential protectionist measures by the USA on the basis of protecting intellectual property (IP) rights as a key source of uncertainty, noting that "advanced manufacturing now makes up 90% of China's exports, and could be vulnerable to accusations of inadequate protection of IP rights".

China has already launched a probe into imports of US sorghum, a grain used in animal feed and liquor.

Last week, Trump said "trade wars are good, and easy to win" when the United States is losing billions on trade.

The Chinese commerce ministry criticised Trump for taking unilateral action instead of working through the World Trade Organisation.

Many people who spoke to Marketplace also did not buy President Trump's claim on Twitter that the US could easily win a trade war.

"The cost of a trade war will be tremendous and it will make everyone unhappy", Junichi Makino, chief economist at SMBC Nikko Securities in Tokyo, said in a report on Friday.

"Talks for the sake of talks are meaningless and we should never loosen sanctions just because North Korea is open to talks".

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