• Communist Party mouthpiece warns latest tariffs move will make it impossible for Washington to ‘win’ the dispute
  • It also calls Beijing’s retaliation a ‘restrained response, different in nature from the American provocation’
US President Donald Trump attends a session at the G7 summit in Biarritz on Sunday. He told media: “We’re getting along very well with China right now. We’re talking.” Photo: AP

Chinese state media has called US President Donald Trump's decision to escalate the tariff war a "strategic mistake" and vowed not to give in to America's "unreasonable demands".

In an editorial on Sunday, Communist Party mouthpiece People's Daily warned that the latest move would make it impossible for Washington to "win" the trade war.

"If some in the United States fail to admit that this is a strategic mistake, or that it will bring losses (to the US) they will end up being the ones who have to face the finger-pointing and will find it is impossible to achieve the win they once bragged about," it read.

It came as the trade war between the world's two largest economies is intensifying, and with further talks to de-escalate tensions yet to be scheduled.

Washington broke a truce agreed in June between Trump and Chinese President Xi Jinping by imposing a 10 per cent tariff on a further US$300 billion worth of Chinese imports late last month. It also labelled China a "currency manipulator" and further inflamed tensions by approving a major arms sale to Taiwan.

Beijing hit back with retaliatory tariffs on US$75 billion worth of American products on Friday, and hours later Trump said he would increase duties on Chinese imports. He also characterised Xi as an "enemy" and called on American companies to stop doing business with China.

Under the latest threat from Trump, the 25 per cent tariff on US$250 billion worth of Chinese imports would go up to 30 per cent from October 1, and the 10 per cent duty on US$300 billion worth of goods would be raised to 15 per cent from September 1.

The editorial did not mention any further retaliatory moves from Beijing, but it sought to defend the latest punitive tariffs and said China was more focused on its own development.

"This was a restrained response and was different in nature from the American provocation," it said.

"China has the confidence to walk its own path and to do things right, and the country can rely on itself for its own development."

China pledges to fight trade war 'to the end' and hits back at Trump's 'barbaric' tariffs

Beijing's tariff announcement on Friday came three weeks after the US decision to levy tariffs on the remaining US$300 billion of Chinese goods that had not been subject to additional duties.

China's move will see new duties " on American imports including soybeans, beef, pork and crude oil " applied in two rounds starting from September 1 and December 15.

Liang Ming, a researcher with the commerce ministry's research institute, told state-run China News Service that China's circumstances meant it would come out of the dispute better.

"It's probably in the most comfortable position (economically)," he said.

Despite Beijing's efforts to stabilise the economy, investment, jobs growth and market expectations since the trade war began more than a year ago, it has been hit by a slowdown. GDP growth slowed to a 27-year low of 6.2 per cent in the second quarter, just above the low end of the government's targeted range of 6 per cent to 6.5 per cent.

The authorities are taking measures to achieve this year's growth target, with Finance Minister Liu Kun on Friday pledging further tax cuts to ease the burden on Chinese companies. That comes after 1.17 trillion yuan (US$239.53 billion) of tax cuts were introduced to help businesses stay afloat in the first six months of the year. Liu also said the central government had provided 54.7 billion yuan in subsidies for businesses to help keep people employed.

Trump's escalation in the trade war was also controversial in the US, where there are fears of a looming economic downturn. Asked if he regretted the latest tariffs move on Sunday, Trump said he had "second thoughts about everything".

"Actually we're getting along very well with China right now. We're talking," he told reporters at the Group of Seven summit in Biarritz, France.

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