China Ponders Cancelling Washington Talks: Report

China is now considering cancelling the next round of talks scheduled to start on Wednesday in Washington after President Donald Trump warned of increase in tariffs, The Wall Street Journal reported, citing a person briefed on the matter.

"China shouldn't negotiate with a gun pointed to its head," the newspaper quoted the source as saying, adding that a final decision had not been made.

Trump announced on Sunday that the United States will raise tariffs on US$200 billion of Chinese goods – a blunt warning to Beijing just days before what is being billed as a last-ditch round of talks to reach a deal or resume their trade war.

To press China even more to accept US demands, Trump also threatened again to impose tariffs on all Chinese imports to the US – worth US$539.5 billion last year.

Following Trump's announcement, Hong Kong and Shanghai stocks tumbled in the first few minutes of trade on Monday.

The next round of talks – if it takes place at all – could see Trump announcing a summit with President Xi Jinping to sign a trade accord with a potentially historic scope, or the trade war could resume and worsen.

For now, the Trump administration insists that the trade war has left the US economy unscathed, unlike the Chinese economy, which last year posted its slowest growth in nearly 20 years.

But many economists are worried about the longer term effects on the US economy.

Some US manufacturers who import Chinese products that are subject to tariffs are already complaining of higher costs. And economists warn that US consumers will end up paying more for everyday items.

China's lead negotiator, Vice Premier Liu He, and his team are expected to arrive in Washington on Wednesday if the talks go ahead. (AFP)