Trump says China is 'killing us' with unfair trade deals

US set to impose 10% tariffs on remaining $300 billion Chinese imports

WASHINGTON: US President Donald Trump on Wednesday said his tough stance on China's economic and trade policies would ultimately benefit the American economy, even as Beijing signalled it could strike back by curbing sales of chemicals known as rare earths that are used in everything from iPhones to military equipment.

The US-China trade war escalated sharply in recent days after Washington branded Beijing a currency manipulator for the first time since 1994 on Monday, and said it would impose 10% tariffs on the remaining $300 billion in Chinese imports, starting on September 1.

The moves have jolted financial markets and fuelled concerns about a global recession. US Treasury yields slumped on Wednesday, with 30-year yields nearing record lows, on growing fears of a global downturn and bets the Federal Reserve would have to cut interest rates further to counter growing recession risks.

Trump told reporters at the White House that the market reaction had been anticipated, but he remained confident in the strength of the US economy.

"Ultimately, it's going to go much higher than it ever would have gone, because China was like an anchor on us. China was killing us with unfair trade deals," he said.

White House officials say they still expect Chinese negotiators to come to Washington in September for talks, and that the latest tariffs could still be averted if the world's two largest economies make progress on a trade agreement. But hopes for a deal are dimming and domestic pressure is growing for Trump to cut a deal with Beijing. Goldman Sachs on Tuesday said it no longer expects the United States and China to reach agreement before the November 2020 presidential election given the "harder line" being pursued by both sides.