US-China trade war: Beijing vows to retaliate as tariffs raised – Business live

Kate Lyons (earlier) and Graeme Wearden (now)

from Economics | The Guardian on 2019-05-10 21:37 (#4EV30)

US has hiked the tariffs on $200bn of Chinese goods to 25% overnight, from 10%, escalating the battle between the two economic powers

Earlier:

10.36pm BST

Donald Trump's hint that the new 25% tariffs on many Chinese goods could be removed, was welcomed on Wall Street.

10.32pm BST

Twitter may not be the best platform for trade negotiations (or many other things too), but nevertheless the US president has turned to it again.

Significantly, he's now suggesting that relations with president Xi are strong -- and hinted that tariffs on China could be removed:

Over the course of the past two days, the United States and China have held candid and constructive conversations on the status of the trade relationship between both countries. The relationship between President Xi and myself remains a very strong one, and conversations....

....into the future will continue. In the meantime, the United States has imposed Tariffs on China, which may or may not be removed depending on what happens with respect to future negotiations!

7.41pm BST

Here's our news story on today 's trade war developments:

6.35pm BST

Wall Street is staging a Friday afternoon rally.

The Dow is now down a mere 50 points, or 0.2%, having been 300 points poorer earlier.

US Secretary Mnuchin said the talks were constructive and trade negotiator Liu said that they went fairly well. The mixed signals from President Trump earlier had put pressure on energy prices and global stock markets, but positive comments from both sides sparked a rebound near close of trading for the week.

6.33pm BST

China's vice-premier Liu He has told Fox News that the talks went well, and will continue in the future.

That's an encouraging sign - suggestion the new tariffs imposed by the US overnight haven't crashed the negotiations.

Vice Premier Liu He just told FOX Business that the talks today "went well" and that the talks "will continue" at some point in the future. #China #Trade.

6.08pm BST

It's official: the negotiations between the US and China over trade have wrapped up. Before lunchtime.

Given they only started yesterday afternoon, it's hard to believe that much was accomplished.

"They were constructive discussions between both parties, that's all we're going to say. Thank you."

BREAKING: Treasury Secretary Mnuchin says China trade talks are done for the dayhttps://t.co/glZAUZzL5A

5.20pm BST

European markets have ended the week with modest gains.

5.18pm BST

Time for a recap:

Fears of a deepening US-China trade war have rippled through the global economy today, after America hiked the tariffs on $200bn of Chinese imports. Almost 6,000 products will now incur a 25% levy at the US border, up from 10% previously.

Liu He has left the building! The @USTradeRep building that is. Shook hands with Lighthizer and @stevenmnuchin1 and waved. Didn't look like he was just going to lunch ...

5.03pm BST

Wall Street hasn't had many bad weeks this year, but this weekly chart confirms that the last five days have been the worst of 2019.

4.58pm BST

Oops! Uber has begun trading at just $42 per share.

That's three dollars (or 6%) below its IPO price (which was already the bottom of its range).

Ouch! #Uber opens at $42 in market debut, after pricing at $45 per share. https://t.co/i9mqHPUR0o pic.twitter.com/0aosy3b6EF

BREAKING: $UBER IPO opens at $42 per share pic.twitter.com/x7Q5TYy0KM

4.51pm BST

Eek. The indicative Uber pricing has now slipped to $42-$43 per share, as haggling continues on the NYSE floor.

That's below the $45 float price set last night, and would be a disappointing start to its life as a public company. People who bought shares in the IPO would be looking at a paper loss.

Floor traders saying 5-10mins for first @Uber trade. #UberIPO pic.twitter.com/6ch2x8LV6f

4.50pm BST

Developing: China's top trade negotiator Liu He leaves U.S. Trade Representative's office after morning talks; unclear if discussions had ended completely for the day or if the vice premier would return for more negotiations https://t.co/glZAUZzL5A pic.twitter.com/1SZsGEZEqO

4.45pm BST

Here's a photo of Liu He leaving the USTR a few minute ago. He's shaking hands with Treasury Secretary Mnuchin.

Liu He leaving U.S. Trade Representative's office. Looks like talks over for moment. pic.twitter.com/atUmVDU3DV

4.39pm BST

Newsflash: China top trade negotiator, vice-premier Liu He, has left the US Trade Representative's office.

It's not clear if that means talks are over for the day. But the two sides can't have discussed much yet, given it's not even lunchtime in Washington DC.

4.27pm BST

Jim Sciutto, CNN's National Security Correspondent, has also chided the president for his comments about tariffs:

The US-China trade war is America's most significant economic challenge. And the US President is repeatedly lying about his strategy, that is, raising tariffs. Tariffs bring NO money to the US. They are taxes on US companies & consumers. This falsehood matters and yet...

4.25pm BST

Donald Trump's tweet saying there's 'no rush' to get a trade deal seems to have worried Wall Street.

The S&P is down over 1% today, taking its losses this week to almost 4%. That's the worst week of this year (which has mainly seen shares rising).

Equity markets are largely in positive territory, but there are all edging lower, as the feel-good factor in relation to the US-China trade situation is starting to wear-off.

The bounce in Asian markets overnight influenced European dealers ,and now that it is dawning on investors that the US-China stand-off is far from over, and things are likely to get worse before they get better.

4.22pm BST

Traders and investors have been waiting almost two hours for Uber's shares to debut on the New York stock market.

There's a big scrum around Citadel Securities' trading post. In the eye of the storm is specialist Peter Giacchi, who has to decide what price to begin trading the shares at.

3.54pm BST

The second day of US-China trade talks are now underway in Washington.

China Vice Premier Liu He has been greeted by US Trade Representative Robert Lighthizer (centre) and US Treasury Secretary Steven Mnuchin.

3.46pm BST

Shares are continuing to slide in New York...

3.42pm BST

Carly Fiorina, the former CEO of technology giant Hewlett-Packard, has warned that slapping tariffs on Chinese imports won't solve the long-term problems in global trade.

Speaking on Fox News, she say:

"There's no question that both the U.S. and China have benefited from a trading relationship over the last 25 years. And there's also no question that things about that relationship need to change.

I think the issue now is tit-for-tat tariffs aren't going to work. Maybe it's useful pressure in the short term but it's not going to work in the long term."

"We have been engaged in an unfair relationship with China for a long time. They have reneged on the commitments they made to the WTO, particularly around intellectual property." Carly Fiorina @MariaBartiromo

3.37pm BST

ITI, which represents US technology firms, has criticised Donald Trump's decision to raise tariffs on China.

Naomi Wilson, ITI's Senior Director of Policy for Asia, warns that it will hurt US companies and drive up costs for consumers. But, she does also heed the concerns over China's business practices.

"We are disappointed that the U.S. and China were unable to reach a deal in time to avoid another escalation of tariffs. While we appreciate the administration's commitment to addressing China's unfair tech trade policies and practices, this trade conflict has taken a significant toll on U.S. businesses, workers, and consumers.

The increase to 25 percent duties on the $200 billion tranche of Chinese imports will raise that toll. This specific tariff increase will affect every day telecommunications equipment like modems and routers that help Americans connect to the internet and with each other.

3.33pm BST

The Dow is on track to hit its lowest closing level in five weeks, after a grim start to May

3.24pm BST

Wall Street is slipping deeper into the red, as the trade war weighs on New York.

3.16pm BST

The Washington Post's Heather Long has pithily fact-checked the president's latest tweets (as I also tried to do earlier).

The level of factually wrong info from the president this morning is high.

1) Americans are paying tariffs, not the Chinese
2) Trump has now raised taxes on Americans by $62.5 billion
3) Pretty much every economist predicts tariffs will hurt the economy https://t.co/JMuq9YqPpT

3.15pm BST

Oxford Economics have calculated that America's economy would take a significant hit if Donald Trump imposes tariffs on all Chinese imports, as he threatened today.

And a full-blown trade war would be much worse:

#Trump notes #trade talks continue in "very congenial manner" & no need to rush as 25% #tariffs applied.
Says process has begun to apply tariffs on all imports from #China @OxfordEconomics: This would reduce US #GDP by 0.5% in 2020; costing the economy $100bn, or $800/household pic.twitter.com/3LWJAzxNxg

3.06pm BST

Incidentally, the honour of ringing the Wall Street opening bell went to Austin Geidt, one of Uber's first employees. She started as an intern in 2010, and has risen to become its head of operations.

2.38pm BST

DING DING! The New York stock market opening bell has been rung (thanks, Uber!), and shares are falling for the fifth day in a row.

The Dow Jones industrial average has dropped by almost 100 points in early trading, or 0.36%, with similar losses across the S&P 500 and the Nasdaq.

2.28pm BST

Donald Trump is calling on companies to move their manufacturing to the US, and avoid his tariffs:

Build your products in the United States and there are NO TARIFFS!

Your all time favorite President got tired of waiting for China to help out and start buying from our FARMERS, the greatest anywhere in the World!

2.18pm BST

US treasury secretary Steven Mnuchin has arrived at the US trade representative's office in Washington, for a second day of talks with the Chinese delegation led by vice-premier Liu He.

2.14pm BST

If you're just tuning in, here's a breakdown of the 5000+ Chinese products facing steeper tariffs when they're imported to the US.

It includes chemicals, building materials, food, consumer goods, and a few unusual items.

2.13pm BST

This week's trade war drama has overshadowed Uber's float on the US stock market, and cost its early investors billions.

The ride-sharing service finally priced its IPO at the lower range of expectations last hight, at $45 per share. That values Uber at $82.4bn.

Uber Eats guys passing out free food on @NYSE floor ahead of IPO. #UberIPO pic.twitter.com/rSHQ4TO33M

1.37pm BST

European stock markets continue to take the trade war in their stride.

All the main indices are higher today, despite the escalating trade tensions between the US and China.

"Given market volatility this week on the fear that trade negotiations fail and tariffs increase today, it may seem odd that equity markets have rallied. It appears however that the greatest fear was for a complete breakdown in talks and an expectation that this would lead to an escalating tit-for-tat trade war with no end in sight.

"Whilst higher tariffs will cost consumers through higher prices, and corporations through lower margins, the market seems willing to take the positives from ongoing talks and the potential for a speedy resolution.

1.20pm BST

Donald Trump's suggestion that US food shunned by China could be given to poor, starving countries has alarmed the FT's trade expert, Alan Beattie.

It may sound terribly humanitarian, but Beattie argues that simply dumping cheap products on a developing country actually causes serious economic harm.

Oh God, no. A return to large-scale agricultural dumping in the guise of food aid. A proven way of undercutting farmers and destroying local markets in developing countries. You would do less damage just chucking the stuff overboard in the middle of the Atlantic. pic.twitter.com/tDZVC4AS8e

Generally what happens is there's a food crisis in, say, sub-Saharan Africa, a grain ship chugs out of Baltimore or wherever (shippers and ports being part of the US food aid lobby btw) & arrives several weeks later just in time to undercut local markets as they start to recover.

1.07pm BST

Wall Street isn't impressed by Donald Trump's claim that there's "no need to rush" to get a trade deal.

The S&P 500 and the Dow Jones industrial average are being called down 0.5% in the futures market, as investors react to last night's tariff hikes.

UPDATE: Trump deleted the original tweets, including the one that referenced 'no need to rush,' but then repeated them. https://t.co/6przhbTP8K

12.56pm BST

That's odd. Those tweets from Donald Trump have just been deleted, and then reposted.

The final post, suggesting a $15bn support plan for US farmers funded by tariffs, has not reappeared (yet).

We have lost 500 Billion Dollars a year, for many years, on Crazy Trade with China. NO MORE!

Talks with China continue in a very congenial manner - there is absolutely no need to rush - as Tariffs are NOW being paid to the United States by China of 25% on 250 Billion Dollars worth of goods & products. These massive payments go directly to the Treasury of the U.S....

....The process has begun to place additional Tariffs at 25% on the remaining 325 Billion Dollars. The U.S. only sells China approximately 100 Billion Dollars of goods & products, a very big imbalance. With the over 100 Billion Dollars in Tariffs that we take in, we will buy.....

....agricultural products from our Great Farmers, in larger amounts than China ever did, and ship it to poor & starving countries in the form of humanitarian assistance. In the meantime we will continue to negotiate with China in the hopes that they do not again try to redo deal!

Tariffs will bring in FAR MORE wealth to our Country than even a phenomenal deal of the traditional kind. Also, much easier & quicker to do. Our Farmers will do better, faster, and starving nations can now be helped. Waivers on some products will be granted, or go to new source!

Tariffs will make our Country MUCH STRONGER, not weaker. Just sit back and watch! In the meantime, China should not renegotiate deals with the U.S. at the last minute. This is not the Obama Administration, or the Administration of Sleepy Joe, who let China get away with "murder!"

12.45pm BST

Rick Scott, Republican senator for Florida, has welcomed Donald Trump's pledge to use tariff revenues to support US farmers.

Speaking on Bloomberg TV, Scott says:

If we're impacting our farmers, we should do what we can do keep them whole". and help them build markets in other parts of the world.

12.18pm BST

Newsflash: Donald Trump has said that there's "absolutely no need to rush" to reach a deal with China.

In a flurry of trade-related tweets, the US president claims that 25% tariffs are NOW being paid on Chinese imports (even though goods that started their journey before midnight will actually only be taxed at 10%).

Tariffs will bring in FAR MORE wealth to our country than even a phenomenal deal of the traditional kind. Also, much easier & quicker to do. Our Farmers will do better, faster, and starving nations can now be helped. Waivers on some products will be granted, or go to new source!

....If we bought 15 Billion Dollars of Agriculture from our Farmers, far more than China buys now, we would have more than 85 Billion Dollars left over for new Infrastructure, Healthcare, or anything else. China would greatly slow down, and we would automatically speed up!

11.46am BST

Newsflash: The UK government has weighed in on the escalating trade dispute between the US and China.

Prime minister Theresa May's spokeswoman has told reporters at parliament that no-one benefits from trade wars, and that Britain hopes for a resolution soon.

"We have been saying on this for some time that we are concerned about it and that we are clear that nobody benefits from trade wars.

The discussions between the two are ongoing and we hope that they will find a resolution to avoid any further escalation."

Trade wars. Still good and easy to win. pic.twitter.com/K8tlL5EIQS

11.19am BST

Ouch! Britain's economy may be growing faster, but it's also failing to close its trade deficit.

The gap between what the UK imports and exports has hit a record high in the last quarter, new ONS figures show.

More worrying for the chancellor the trade deficit widened again - to 3.4% - meaning we imported more than we expected and v interesting fact GOLD, the ultimate safe haven in nervous times, was a big factor coming into the UK. Exclude it deficit was 2.3%! @Channel4News

11.04am BST

Britain's construction sector grew by 1% in the last quarter, as building firms got busier.

But Clive Docwra, managing director of construction consulting and design agency McBains, says Brexit is still hurting the sector.

"Today's figures mark another increase in output, coming after last month's statistics showed unexpected moderate growth during February.

"However, this was driven by repair and maintenance - there was no growth in new work across the first quarter of the year, including a decrease in private commercial and housing work.

10.41am BST

Britain's politicians are predictably split on whether the UK is romping along healthily, or simply scrambling to protect itself from Brexit.

The Chancellor of the Exchequer, Philip Hammond, takes an upbeat view on today's growth figures, pointing out that we've now enjoyed nine years of growth.

"Today's figures show the economy remains robust, with growth of 0.5% in Q1 benefitting every major sector.

"The economy has grown for nine consecutive years, debt is falling, employment is at a record high and wages are rising at their fastest pace in over a decade.

"It's not surprising to see households and businesses protecting themselves against a potentially disastrous Tory No Deal Brexit.

"With this government increasingly resembling a business entering administration it's time they admitted the failure of their approach and stood aside for a General Election.

10.23am BST

Britain's manufacturers insist that all isn't rosy, despite enjoying the biggest surge in output since the Lawson boom of the late 1980s.

Seamus Nevin, chief economist at Make UK, the manufacturer's organisation, fears that Brexit - and the US-China trade war - could both hurt the UK economy this year.

While we can hopefully look forward to a good summer as firms wind down their emergency Brexit planning, the increasing global economic slowdown and growing trade dispute between China and the US means a downturn is still possible.

Output has been artificially boosted in the first part of this year by emergency stock build-ups in preparation for a potential no deal Brexit. That risk is still not off the table.

10.11am BST

Encouragingly, UK business investment rose by 0.5% in the last quarter, ending a year-long slump.

Today's GDP report also shows that household consumption also rose, by 0.7%. That's a sign consumers kept spending despite the uncertainty and delays over Britain's departure from the EU.

There were encouraging signs that underlying growth gained some pace in Q1. Household consumption rose by a solid 0.7% q/q. Meanwhile, despite the ongoing Brexit chaos, business investment did not fall (it rose by 0.5% q/q) for the first time in four quarters.

10.09am BST

GDP increased by 0.5% in Q1 2019 driven by growth of 2.2% in manufacturing output.

That's companies stockpiling ahead of a possible no-deal Brexit, as the Bank of England said last week.

Just look at that impact though... pic.twitter.com/m0xaeQz0MV

10.04am BST

While monthly GDP data can be volatile, it appears that January provided most of Britain's growth in the last quarter:

Strong Q1 growth masks slowdown in economy @ons estimates GDP grew 0.5% in Jan, grew 0.2% in Feb but FELL 0.1% in March

9.55am BST

This chart shows how UK growth bounced back in the last quarter

On an annual basis, year-on-year growth accelerated to 1.8%, up from 1.4% in Q4 2018.

9.53am BST

Britain's manufacturing sector has surged back in the last quarter -- probably due to a rush to stockpile ahead of Brexit.

Today's growth figures show that UK manufacturing output increased by 2.2%, its fastest rate since Quarter 3 (July to September) 1988.

9.33am BST

Newsflash: Britain's economy picked up pace in the last quarter, despite stalling as the Brexit crisis raged in March.

UK GDP rose by 0.5% in the first three months of 2019, new figures from the Office for National Statistics show. That's up from 0.2% in the fourth quarter of 2018.

9.30am BST

The markets may be too complacent about the trade war, fears Simon Harvey, FX analyst at Monex Europe.

"The assumption for now seems to be that the sabre rattling of the past week is part of a still-functioning negotiating process that will yield results in the near future - if this assumption is challenged volatility has the potential to get much worse".

9.16am BST

Trade war fears led investors to pull over $20bn out of global stock markets in the last week, according to new figures from Bank of America.

This is the third-biggest outflow of 2019.

8.55am BST

China's foreign ministry spokesman Geng won't reveal how Beijing will retaliate.

He says we should "stay tuned" to hear the detailed measures which China will take.

#US govt is urged to respect the principle of the market economy & stop its groundless containment toward Chinese firms, said Chinese Foreign Ministry spokesperson on the US @FCC voting Thursday to deny #ChinaMobile's bid to provide telecom services in US. pic.twitter.com/HloG3Ce7ae

8.44am BST

Comments are now turned on, by the way, so do let us know what you think about the trade war - and other important issue...

8.37am BST

China's foreign ministry is holding a press conference in Beijing now.

8.34am BST

Carmaker Jaguar Land Rover has suffered an alarming slump in sales in China last month -- a sign that consumer demand is weak after months of trade tensions.

My colleague Jasper Jolly explains:

Jaguar Land Rover (JLR) sales slumped in April after continued weakness in China, amid reports that its Indian owner, Tata Motors, is considering selling the luxury carmaker.

Global sales at Britain's largest carmaker fell by 13.3% last month compared to April 2018, as Chinese sales plunged by 45.7%, JLR said on Friday.

8.22am BST

Got questions about the US-China trade war? Don't worry, we've got the answers:

8.16am BST

European stock markets have opened higher, as traders resist panicking over the escalating trade war:

The Chinese delegation is in Washington, presumably tucked up in bed. Maybe we get some news today, or maybe we have to wait for a weekend of Tweeting.

Increased tariffs are in place though they only take effect on goods now leaving China so theoretically could be cancelled before anyone has to pay anything.

8.08am BST

Bloomberg is reporting that the Chinese government has been buying shares, though state-controlled fund.

That suggests they're trying to prop up equities, and helps explain why the Shanghai stock market has rebounded in late trading.

According to Bloomberg & its sources, China State Funds jumped in after lunch break & it explains why it dipped & bounced massively.

So what's the meaning of this? More help from gov? pic.twitter.com/nSsAfFJLgD

7.59am BST

Patrick Zweifel, chief economist at Swiss-based Pictet Asset Management, predicts that China will indeed retaliate against the US.

He also points out that the trade war will hurt both country's economic growth.

1/3
a #US officially increased tariff from 10% to 25% on $200bn Chinese goods that will be exported from #China beginning today (May 10) i.e. goods that are currently on their way to the US will still be subject to the previous 10% rate

2/3
a In practice then, new tariff will become effective in a few weeks, which opens an unofficial window to continue negotiations. Talks will continue today

a China will retaliate and US will start the process (c.3 months) of imposing the remaining $300bn of goods at 25%

3/3
a Assuming no #USChina deal and with current higher tariffs remaining in place, the negative impact on China's GDP growth would be some 0.5% and some 0.2% on US growth, with just the additional increase in tariffs representing a cost for the US of 0.15% of 2018 US GDP pic.twitter.com/i6blc8vPZd

7.56am BST

Robert Ward of the The Economist Intelligence Unit says Bruno Le Maire is right -- a full-blown trade war is the biggest threat to the world economy.

As US raises tariffs on $200bn Chinese exports, a reminder that escalation/spillover of US-China trade war has for a while now been @TheEIU's top global risk. Tariffs damaging for CN, but also no free lunch for Trump as US companies/consumers ultimately absorb higher costs. pic.twitter.com/nv9Ht7sXDH

7.52am BST

Higher tariffs often lead to higher prices in the shops (as importers pay the bill, and then pass the charges onto consumers).

But economist Paul Donovan of UBS Wealth Management suspects US companies will try to swallow the bill themselves, and hopes that a trade deal means the new tariffs are reversed soon.

7.33am BST

France's finance minister, Bruno Le Maire, has just warned that the US-China trade dispute is "negative" for the world economy, Reuters reports.

The risk of further escalation is the biggest risk to global growth, Le Maire adds, in a sign that policymakers are watching the trade talks closely.

7.31am BST

The Chinese stock market is staging a late rally too - up almost 3% in its best day in five weeks.

*SHANGHAI COMPOSITE EXTENDS GAIN TO 2.7%, MOST SINCE APRIL 1 - BBG
*#CHINA'S CHINEXT GAUGE EXTENDS GAIN TO 4%
*YUAN EXTENDS GAIN TO 0.34%, TRADES AT 6.8022

7.19am BST

Morning all.

European stock markets are set to bounce back this morning, despite Donald Trump escalating the trade war with Chins with higher tariffs on $200bn of imports..

European Opening Calls:#FTSE 7235 +0.38%#DAX 12012 +0.32%#CAC 5335 +0.40%#MIB 20867 +0.24%#IBEX 9118 +0.25%

The market's reaction has not been all doom and gloom. We are not seeing see the same risk off reaction that we have seen in previous sessions. The fact that the two sides have agreed to continue negotiations on Friday is offering a glimmer of hope that the relationship between the two powers hasn't deteriorated beyond repair.

Markets are also clinging to Trump's comments over a "beautiful letter" from Chinese President Xi Jinping and an expected phone conversation between the two leaders

7.03am BST

I'm handing over to my colleague Graeme Wearden, thanks for your company and keep following along.

7.03am BST

6.49am BST

Global Times, the Chinese state tabloid, reports that the Shenzen and Shanghai markets quickly rebounded after the new tariffs were introduced.

The Shenzhen and Shanghai markets quickly rebounded after turning green shortly after the afternoon session opened on Friday. By 1:25 pm, the Shanghai and Shenzhen markets rebound has driven the surge of circuit board shares. #stock #trade war pic.twitter.com/wqTT9BOqMU

6.40am BST

The Australian dollar has fallen below the US$0.7 mark again after the Reserve Bank was forced to slash its forecasts for economic growth today.

The trade war won't be good news for the Aussie either but the RBA is now sketching out a much grimmer picture than previously. It now expects annual GDP growth in the 12 months to June of 1.75%, compared to the 2.25% it flagged six months ago. The target for 12 months to December is downgraded from 3.0 to 2.75%.

6.30am BST

Following on from the positivity in Asia, the FTSE100 is expected to open 0.4% higher this morning, according to futures trading. In New York, however, the Dow is on course for a fall of the around the same magnitude.

This tweet earlier from IG Markets shows the general picture:

Everything coming off now, as hope of a last minute reprieve fades. #tradewars pic.twitter.com/WogtDBMjaY

6.18am BST

Michael Hewson, chief market analyst at CMC Markets UK, has this assessment of the day's events and what impact they might have on the markets. He says:

Given the deadline has now passed there is the possibility that tariffs could still be avoided given that US officials allowed for goods currently in transit to be exempt from the new tariff increases, which means there is a potential window, albeit a limited one, for an agreement to be hammered out, after President Trump said that a deal still remained possible.

It is this hope that investors may well cling to as the tariff deadline passed earlier today, while China said it would take measures to retaliate in due course.

6.06am BST

An note on the impact of the grace period on the tariffs. The new 25% duty is only applied to cargoes leaving China after 12:01am on Friday.

5.58am BST

Lily Kuo, in Beijing, has this wrap of the tariff hike.

Last-minute talks in Washington between Chinese vice premier Liu He and US trade representative Robert Lighthizer failed to salvage months of talks on a deal and at 12.01am on Friday tariffs on Chinese goods were raised to 25% from 10%.

5.47am BST

My colleague Graeme Wearden has compiled this selection of some of the products that the 25% tariff will be placed on.

5.36am BST

The tariffs may have kicked in but investors still appear to be holding out for some sort of last-minute solution.

China's main index, the Shanghai Composite, is up 1.5% and the Hang Seng is up too. In Tokyo the Nikkei is down around 0.8% while the Australian ASX200 is flat.

Offshore yuan doesn't appear to care about higher tariffs.

Which seems as good a reason as any to sign off. pic.twitter.com/c7wtY2j3Zb

5.32am BST

Here's how the Chinese state media is reporting on Beijing's reaction to the news.

#BREAKING China vows to retaliate after the US moved to increase #tariffs on $200 billion worth of Chinese goods to 25%. Countermeasures expected soon: Chinese commerce ministry pic.twitter.com/YoBCTiBFTu

#BREAKING: China "deeply regrets" U.S. tariff hike -- Chinese delegation pic.twitter.com/n21OFUCjyf

#BREAKING: China "will have to take necessary countermeasures" to U.S. tariff hike -- Chinese delegation pic.twitter.com/4TOqJ1PqtW

5.15am BST

China's ministry of commerce has released a statement saying it "deeply regrets" the US tariff hike and vows to retaliate after the US moved to increase tariffs on $200 bn worth of Chinese goods from 10% to 25%.

5.05am BST

A reminder that on Thursday, Gao Feng, a spokesperson for China's ministry of commerce, said China was ready to hit back if the US pushed through with its plan to increase tariffs.

"We hope the US side could meet the Chinese side halfway to address the issue through dialogue rather than unilateral measures," Gao told a press briefing.

"At the same time, the Chinese side is fully prepared and has the resolve and capability to safeguard its own legitimate rights and interests."

5.02am BST

Tariffs of 25% on $200bn worth of Chinese goods have come into effect, as we passed the midnight deadline without a deal reached by the US and China.

All eyes are on the markets to see how they react to the news.

4.54am BST

It is less than 10 minutes until the increased tariffs come into effect, we will be watching the markets' reaction carefully.

4.46am BST

Earlier on Thursday, the US Customs Office revealed that goods which set off from China to the US before the midnight deadline would still be taxed at 10%, not the new 25% rate.

4.25am BST

If you'd like to read the full memo from the US Customs and Border Protection service about the increase in tariffs to 25% that is due to come into effect on 10 May (ie. in 35 minutes), you can read it here.

4.19am BST

Earlier, Phillip Inman reported that President Xi Jinping sent a message to Trump that he would talk to his US counterpart ahead of the deadline, though we do not know if that conversation has happened this evening.

Trump said on Thursday he had received a "beautiful letter" from Xi as negotiations on a trade deal between the two countries continued in Washington.

4.02am BST

Asian shares inched up from two-month lows on Friday, hours ahead of the Trump administration's plan to raise tariffs on Chinese imports, as investors waited to see if negotiators can salvage a deal and avoid a sharp escalation in the trade war, Reuters reports.

3.50am BST

Trade talks have wrapped up for the night, but both sides have agreed to continue discussions tomorrow, the White House has confirmed in a statement:

"This evening, Ambassador Lightizer and Secretary Mnuchin met with President Trump to discuss the ongoing trade negotiations with China. The Ambassador and Secretary then had a working dinner with Vice Premier Liu He, and agreed to continue discussions at USTR."

3.45am BST

Fears of a full-blown trade war between the US and China have escalated today as the deadline for the two superpowers to reach a deal over trade tensions fast approaches.

US president Donald Trump had threatened to impose higher tariffs (25%, rather than the 10% tariff currently in place) on $200bn worth of Chinese goods at midnight Washington time on Thursday (in about an hour) unless Beijing's negotiators offered a compromise.

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