Donald Trump says tariffs are working, US and China are talking

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China on Friday announced retaliatory tariffs on $60 billion worth of U.S. goods ranging from liquefied natural gas (LNG) to some aircraft and warned of further measures, signalling that it won't back down in a protracted trade war with Washington.

On Wednesday, Trump proposed a higher 25 percent tariff on $200 billion worth of Chinese imports.

Markets will be closely watching the data on two-way trade between the world's two biggest economies, as well as China's trade surplus with the United States, a sore point in the trade relationship.

In July, Washington fired the first salvo in the escalating trade war with Beijing by introducing 25 percent tariffs on Chinese imports worth $34 billion.

Chinese state media on Monday lambasted U.S. President Donald Trump's trade policies in an unusually personal attack, and sought to reassure investors anxious about China's economy as growth concerns battered its financial markets.

But economists now worry that a continually widening trade deficit - which will be exacerbated if Trump keeps upping tariffs - will slow the US economy in the second half of the year, reports The Wall Street Journal.

Trump campaigned on a promise to bring down America's massive trade deficits by renegotiating trade agreements and getting tough on countries like China that sell the USA far more than they buy from it. The next round of tariffs on mutual imports worth $16 billion could come into force on Friday. Because US farmers are now experiencing the phenomenon of having a surplus of goods that they can not sell on the Chinese market due to the retaliatory tariffs already in place, the American federal government will now likely have to bail farmers out due to the losses of revenue they have incurred simply because they are being artificially isolated from the Chinese market that represents a lion's share of their profits.

The U.S. hit back with tariffs on 1,300 Chinese goods worth $50 billion.

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In Twitter posts on Sunday, Trump said the US' punitive tariffs were "working big time".

April 9: China filed a complaint to the World Trade Organization (WTO) against Trump's metal tariffs.

April 2: China imposed tariffs between 15 percent and 25 percent on 128 USA products worth a total of $3 billion.

"In addition to the tariffs impact, there might be some impact from front-loading of orders in previous months", said Betty Wang, Senior China Economist at ANZ in Hong Kong.

'Will depend on U.S'.

US Secretary of State Mike Pompeo, however, remained staunch on Washington's push for fairer trading conditions with China.

Shipping containers, including one labelled "China Shipping", are stacked at the Paul W. Conley Container Terminal in Boston, Massachusetts, U.S., May 9, 2018.

"Some of the currency fall though I think is just money leaving China because it's a lousy investment, and if that continues that will really damage the Chinese economy", Kudlow said in a Bloomberg Television interview Friday with Jonathan Ferro. "Time will prove that the USA eventually makes a fool of itself", the Global Times said.