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US-China trade war truce thrown into doubt

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The United States has blamed an "erosion of commitments" by China for a threatened escalation in their trade war.

A deal to end the US-inspired conflict had thought to be close but for an announcement on Sunday by President Donald Trump that tariffs on $200bn (£152bn) of Chinese goods were to go up from 10% to 25% from Friday.

His tweet to confirm the move accused Beijing of attempting to renegotiate elements of an agreement to end the 10-month stand-off.

He later tweeted: "The United States has been losing, for many years, 600 to 800 Billion Dollars a year on Trade. With China we lose 500 Billion Dollars. Sorry, we're not going to be doing that anymore!"

The tariff hike announcement hit financial markets on Monday as investors got to grips with the realisation – though officials confirmed further top level talks would be taking place in Washington this week ahead of Friday's deadline for new tariffs.

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US trade representative Robert Lighthizer accused Beijing of backtracking on the terms of the agreement.

"Over the course of the last week or so we have seen… an erosion in commitments by China.

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"That in our view is unacceptable," he told reporters.

"We're not breaking off talks at this point. But for now… come Friday there will be tariffs in place."

Image: President Trump and China's Xi Jinping meet after the G20 in Buenos Aires in December

Chinese vice premier Liu He is expected to be in Washington for the latest talks, due to resume on Thursday.

US treasury secretary Steven Mnuchin admitted they had hoped to sign a deal this week.

He said: "They were trying to go back on language that had been previously negotiated, very clear language, that had the potential of changing the deal dramatically.

"The entire economic team are completely unified and recommended to the president to move forward with tariffs if we are not able to conclude a deal by the end of the week."

China's foreign ministry responded: "We are also in the process of understanding the relevant situation.

"What I can tell you is that China's team is preparing to go to the United States for the discussions."

A spokesman later added on Tuesday: "Adding tariffs can't resolve any problem."

The FTSE 100 – open for the first time this week following Monday's Bank Holiday – was trading 1% lower by midday.

Neil Wilson, chief market analyst at Markets.com said: &Read More – Source