On Thursday the USA and Chinese trade negotiators ended the first of two days of talks aimed at saving a trade deal even as President Donald Trump said the new "very heavy tariffs" on Chinese products would go ahead. Commerce Ministry spokesman Gao Feng said the decision to send Liu to Washington despite the tariff hike threat demonstrated China's "utmost sincerity".
China has retaliated with steep tariffs on U.S. agricultural imports, especially soy beans, although the Trump administration paid $12 billion in compensation to help hurting United States farmers.
Minutes after the United States increased punitive duties on $200 billion in imports from China from 10 to 25 percent, the Chinese commerce ministry said it "deeply regrets" the move and repeated its pledge to take "necessary countermeasures", without elaborating.
The three major US indexes had been near all-time highs last Friday, with the Dow up 12 percent for the year, the S&P 500 up more than 15 percent, and the Nasdaq ahead 20 percent.
If tariff hikes go ahead, "risks of a financial market collapse, extreme risk aversion, and sharp slowdown in global growth will spike", said Philip Wee of DBS Group in a report.
The Standard & Poor's 500 index retreated 1.4 percent and the Nasdaq Composite was 1.8 percent in the red in midmorning trading.
Japan's Nikkei was off 0.3 percent. But economists warned a deal might be further away than investors hoped.
"The reason for the China pullback & attempted renegotiation of the Trade Deal is the honest HOPE that they will be able to 'negotiate" with Joe Biden or one of the very weak Democrats, ' Trump tweeted on Wednesday. Trump told reporters earlier in the day that such a move is necessary to hold China to previous commitments.
The trade data have been volatile in recent months amid big swings between exports and imports because of the United States' conflicts with trading partners.
If successful, the deal is anticipated to bring the lifting of tariffs on each others' imported goods, as well as enhanced intellectual property protections for Chinese companies and expanded markets in China for USA goods.
Both sides were trying to fix the damage and conclude some sort of deal that is in the interest of the two biggest economies in the world. "China has made preparations to respond to all kinds of possible outcomes".
Mr Lighthizer released an official notice on Wednesday that duty rates on a vast array of Chinese-made electrical equipment, machinery, auto parts and furniture would jump to 25 percent on Friday. Global Times is a tabloid published by the Communist Party's People's Daily.
Chinese officials deny Beijing steals or pressures companies to hand over technology, despite what security experts say is a mountain of evidence the ruling party rewards those who acquire it and sometimes directly carries out theft. That had the effect of making Chinese products cheaper, relative to the U.S. The U.S. central bank last week kept interest rates unchanged and signaled little desire to adjust monetary policy anytime soon.
President Trump has many doubters (including, in all honesty, myself) about his ability to navigate the waters of worldwide diplomacy.
Automakers and competitors in other industries are also required to work through joint ventures with state-owned local partners that can not function unless the foreign company supplies technology and teaches a potential Chinese competitor to develop its own.