China vows fight over trade moves

The US Chamber of Commerce and major US retailers earlier sent a letter and statement to Trump urging he not proceed with the broad tariffs on China.

"What avenues are we going to take to protect the $7 billion export agriculture market from my state from being retaliated against in this trade war that the president is basically embracing?" Maria Cantwell, a Democratic senator from Washington, asked Lighthizer.

"It's not something I think that in an economy like in the state of Washington, which is so trade dependent, is ready to embrace," she said. "They look at this 1980s view as a very retro policy: 'Let's start a trade war.' We'd like something more sophisticated."

China will "take all necessary measures" to resolutely protect its legitimate rights and interests that might be hampered by the possible US initiation of a Section 301 investigation into the country, the Ministry of Commerce said on Friday.

On Friday, the ministry published a list of 128 US products that are subject to increased Chinese tariffs in response to the US Section 232 action under the US Trade Expansion Act of 1962 action that will impose a 25 percent tariff on steel imports and a 10 percent tariff on aluminium imports in the name of national security.

World Trade Organization rules allow countries to retaliate against such US actions relative to the value of the exporting country's lost trade. The products include a wide range of fruits, sparking wines, pork and steel pipes.

Lighthizer will consider whether the US response

should include increased tariffs on goods from China, and if so, he should publish a proposed list of products and any intended tariff increases within 15 days of the memorandum. A final list would be published to implement any tariffs after a period of notice and comment.

At Thursday's hearing, Lighthizer indicated that Chinese products and industries in the "Made in China 2025" strategy will be the primary targets.

The memorandum directs Mnuchin to address concerns about Chinese FDI in the US and report the progress within 60 days of the memorandum.

Foreign Ministry Spokeswoman Hua Chunying said the two countries have remained in close communication on trade issues at various levels.

Constructively resolving differences and friction, and safeguarding the healthy and stable growth of bilateral trade are the consensus of both countries' leaders, she said on Thursday.

US export restrictions on China are a factor in the trade imbalance, she said, adding that a complete trade balance is unrealistic and unreasonable, and it's not fair to accuse only China.

"I hope both sides sit down to conduct constructive dialogue and consultation and pursue mutual benefits and win-win results based on equality and mutual respect," she said, adding that China and the US can be positive role models in maintaining the stability of the global economy.

"I have tremendous respect for President Xi," Trump said. "We have a great relationship. They're helping us a lot in North Korea.

"But we have a trade deficit ... there are many different ways of looking at it, but no matter which way you look at it, it is the largest trade deficit of any country in the history of the world," Trump said.

Zhang Monan, a researcher at the China Center for International Economic Exchanges, said the Trump administration needs a way to attract votes for the November elections.

"It is unwise to stop effective official talks," Zhang said. Tu Xinquan, a professor of international trade at the University of International Business and Economics in Beijing, said a trade war could push China to seek more technology partners from Europe to the detriment of US firms.

The memo was signed a day before the Section 232 steel and aluminium tariffs are expected to be imposed. But Lighthizer said on Thursday that in addition to the exemptions for Mexico and Canada, the tariffs on countries in the European Union, Brazil and Argentina - all major steel exporters to the US - will be put on pause. Japan remains on the list.

Jing Shuiyu and Zhong Nan contributed to this story.