Trump says China will be 'hurt very badly' if no trade deal

President Donald Trump

President Donald Trump

"Americans understand the need to hold China accountable, but they also need to know that the administration understands the economic pain they would feel in a prolonged trade war", Grassley said in a statement.

"Tariffs are NOW being paid to the United States by China of 25% on 250 Billion Dollars worth of goods & products", Trump tweeted on Friday.

Despite the mounting economic threat and escalating tensions, Trump was optimistic about reaching a deal with China.

Relations between Washington and Beijing have been tense since US President Donald Trump decided last June to impose 25 percent tariffs on $50 billion worth of Chinese goods in a bid to fix the US-Chinese trade deficit.

Chinese Foreign Ministry spokesman Geng Shuang also said it was his understanding that China and the United States had agreed to continue "pursuing relevant discussions", cited by Reuters.

With the trade war continuing and a deal nowhere in sight, next month's meeting between Trump and Chinese President Xi Jinping at the G20 summit in Osaka will likely be a contentious one. "But I think we have to be cautious about raising tariffs on both sides, because that'll hurt our economy ultimately".

Two U.S. lawmakers voiced support for Trump's trade fight with China, but with reservations.

"Make your product at home in the United States of America and there is no tariff", Trump countered on Tuesday.

Earlier on Monday, Trump had said China should not retaliate because "things could only get worse", however, just hours later China unveiled its new round of tariffs in a tit-for-tat move against the U.S. which had imposed $200 billion worth of Chinese goods in the midst of the trade war last week. This should have been done by our leaders many years ago. A further escalation of the trade war could disrupt global supply lines and damage an already slowing world economy, sending financial markets into a tailspin.

Trump, however, is still dangling the prospect of higher tariffs on Chinese goods. China retaliated on Monday with tariffs on $60bn of United States imports, precipitating a dive on the USA stock markets.

More than 10 rounds of negotiations have been held between the two sides, ever since the two leaders agreed to put a hold on the trade dispute on the sidelines of past year " s G20 summit in Argentina.

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