US stocks climbed on the comments from the White House.
Reuters reports that on Friday China deleted its previous commitments to change laws in response to many core U.S. complaints, including the potential theft of American intellectual property and trade secrets, in each of the draft trade deal's seven chapters.
President Donald Trump said that Chinese officials were mistaken if they hope to renegotiate tariffs at a later date with a Democratic administration.
China's exports unexpectedly shrank in April but imports surprised with their first increase in five months, painting a mixed picture of the economy as Beijing and Washington make a last-ditch bid for a trade deal before a hike in US tariffs. Trump also said he would be happy to keep tariffs on Chinese imports in place.
"The Chinese side deeply regrets that if the USA tariff measures are implemented, China will have to take necessary countermeasures".
Trump vowed Sunday to ratchet up existing tariffs this week and also to extend the 25 percent punitive duties to the remaining $350 billion in Chinese goods imported into the country each year. "Investors have thought some more about the risk of a no-deal with China, and they continue to back away from stocks until this issue is resolved one way or another". Both Mnuchin and Lighthizer considered that unacceptable, given China's history of failing to fulfill reform pledges.More news: Venezuelan Justice Arrests Opposition Legislator Edgar Zambrano
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Thousands of goods are affected by this latest move, and will become more expensive for USA companies to import. Lighthizer said he would be filing the paperwork as soon as possible and that tariffs would go up at midnight Friday.
Wall Street's broad sell-off Tuesday came after U.S.
The swift deterioration in negotiations between the world's two largest economies has jolted global financial markets.
Data released Wednesday morning in China suggested that its trade surplus in April stood at $13.84 billion, well below expectations. The sources told Reuters the extent of the setbacks in the revised text were serious and that Trump's response was not merely a negotiating strategy.
United States stock futures briefly pared losses after Trump's tweets, though investors remained on edge after a two-day trade-fomented rout wiped out more than US$500 billion from the value of American equities.
The smaller Shenzhen index shed 0.7 percent and the start-up board ChiNext Composite index fell 1.5 percent. China's position was that it would adopt policies to meet the demands but not actually change its laws.
Liu is set to arrive in Washington on Thursday for two days of talks that just last week were widely seen as pivotal - a possible last round before a historic trade deal.
"We've got to do everything we can to build up the American economy and stop sitting here and trying to build up the Chinese economy", he said.
Washington said that China was seeking to renege on its commitments, rendering the 150-page draft agreement worthless.
Shares opened lower in Europe on Thursday, extending a retreat in Asia that deepened after China's Commerce Ministry said Beijing would retaliate if the USA follows through with a plan to raise tariffs on Chinese imports.
Washington has already imposed tariffs on $250 billion worth of Chinese imports, while Beijing retaliated with levies on $110 billion in US goods.