BEIJING/WASHINGTON • China and the United States escalated their trade war yesterday, with both sides implementing punitive 25 per cent tariffs on US$16 billion (S$21.9 billion) worth of the other's goods.

The world's two largest economies have now slapped tit-for-tat tariffs on a combined US$100 billion of products since early last month, and more are in the pipeline, adding to risks to global economic growth.

China has filed a complaint to the World Trade Organisation against the latest tariffs, the country's Commerce Ministry said yesterday, and will "continue to take necessary countermeasures".

Washington will hold hearings this week on a proposed list of an additional US$200 billion worth of Chinese imports to face duties.

US Customs and Border Protection confirmed on its website that at 12.01am (12.01pm Singapore time) yesterday, just past noon in Beijing, it began collecting extra 25 per cent duties on 279 Chinese import product categories valued at US$16 billion. China has said its own tariffs on a list of US$16 billion worth of imports from the United States would be effective at 12.01pm local time.

The tariffs took effect amid two days of talks in Washington between mid-level officials from both sides, the first formal negotiations since US Commerce Secretary Wilbur Ross met Chinese economic adviser Liu He in Beijing in June.

Business groups expressed hope that the two-day meeting would mark the start of serious negotiations over Chinese trade and economic policy changes demanded by US President Donald Trump.

However, Mr Trump on Monday told Reuters that he did not "anticipate much" from the talks led by US Treasury Undersecretary David Malpass for International Affairs and Chinese Commerce Vice-Minister Wang Shouwen.

Economists reckon that every US$100 billion of imports affected by tariffs would reduce global trade by around 0.5 per cent.

They have assumed a direct impact on China's economic growth this year of 0.1 to 0.3 percentage point, and somewhat less for the US, but the impact will be bigger next year, along with collateral damage for other countries and companies tied to China's global supply chains.

Mr Trump has threatened to impose duties on virtually all of the more than US$500 billion of Chinese goods exported annually to the United States unless Beijing agrees to sweeping changes to its intellectual property practices, industrial subsidy programmes and tariff structure.

That would more than exceed the size of China's imports from the US, raising concerns that Beijing could consider other types of retaliation, such as making life more difficult for American firms in China or letting its yuan currency weaken further to keep its exports competitive.

Beijing has denied US allegations that it systematically forces the unfair transfer of US technology, and has said that it adheres to World Trade Organisation rules.

Washington's latest tariffs apply to products including semiconductors, plastics, chemicals and railway equipment that the Office of the US Trade Representative has said benefit from Beijing's "Made in China 2025" industrial plan to make China competitive in high-tech industries.

China's list of 333 US product categories hit with duties includes coal, copper scrap, fuel, steel products, buses and medical equipment.

REUTERS