Hammond warns of ‘dangerous’ escalation of US-China trade war
Britain has urged the United States and China to step back from a “full-blown trade war” as Beijing threatened retaliation for the latest round of US tariffs.
Chancellor Philip Hammond said an escalating dispute between the two countries could be “very dangerous” for the global economy – including the UK.
The US administration of Donald Trump announced on Friday it was more than doubling duties on 200 billion dollars (£155 billion) of Chinese imports from 10% to 25%.
The Chinese Commerce Ministry responded by saying it “deeply regrets” the move and warned it would take “necessary countermeasures”.
Mr Hammond said the worsening dispute was a “worry”, although he remained “optimistic” that resolution would eventually be found.
“If there was a full-blown trade war between the world’s largest economies – that would be very serious indeed for growth prospects across the globe. That could be very dangerous,” he said.
“We have already seen a negative effect of forecasts for global growth largely caused by trade tensions between China and the US, so this is a worry.
“A full-blown trade war would have a very serious dampening effect on the whole global economy, including the UK, but I think we are a way away from that yet and I hope that this will be resolved.”
He added: “I am optimistic that in the end there will be a trade deal between China and the US.
“That is very important for us in the UK because our economy is a very open economy so it is very exposed to what is happening elsewhere in the world.”
Downing Street also expressed concern about the prospects of an escalation of the dispute.
“We are clear that nobody benefits from trade wars,” a No 10 spokeswoman said.
“Discussions between the two are ongoing and we hope they will find a resolution to avoid any further escalation.”
The spat erupted as US and Chinese negotiators were due to begin further talks in Washington aimed at resolving a dispute which has rocked financial markets and disrupted world trade.
The latest increase extends 25% US duties to a total of 250 billion dollars (£192 billion) of Chinese imports.
Beijing retaliated for previous tariff hikes by raising duties on 110 billion US dollars (£85 billion) of American imports.