West Texas Intermediate and international-benchmark Brent crude oil futures are under pressure early Wednesday after China said it will retaliate against the latest round of US tariffs on Chinese imports. Washington has long criticized China's trade surplus with the United States and has demanded Beijing cut it.
A spokeswoman for the U.S. Trade Representative's office could not immediately be reached for comment on China's retaliation announcement or whether this would trigger Trump's next round of threatened tariffs on $200 billion worth of Chinese goods.
Still, disagreements between the two major economic powers run deeper than just the trade balance and tensions remain over market access, intellectual property, technology transfer and investment.
China said it will begin imposing 25 per cent duties on an additional US$16 billion of American goods immediately after USA levies take effect, making good on its pledge to retaliate in kind.
Sales to the U.S. rose by 13.3%, while China's surplus with the States shrank marginally to $28.1bn (£21.7bn) last month from a record $29bn (£22.4bn) in June.
China's surplus with the United States shrank marginally to $28.09 billion last month from a record $28.97 billion.
Washington imposed tariffs on $34 billion of Chinese products on July 6. But it was 11% higher than in the same month past year.
Although the move was expected, it cements the view that there appears to be no effort underway to defuse the dispute between the world's two largest economies that have continued to exchange threats.
The escalating trade conflict between the world's two largest economies...has seen the two sides impose tariffs on 34-billion dollars worth of each other's goods.
Beijing has called on USA officials to be "cool headed", but fired back warning it would impose duties on an additional $60 billion in U.S. goods, a threat the White House dismissed as "weak".
The latest commentary from state media on Wednesday took a softer line after resorting to personal attacks against Trump earlier in the week, saying China could get through the storm but refrained from directly mentioning the US President.
"Although this may for a moment bring preening with delight, it will make it hard to resolve economic imbalances or out of kilter politics and other deep-rooted problems".
Should the USA proceed with those tariffs, China's ready to slap duties on an additional $60 billion of American goods.
The United States published its final list of goods subject to the new tariffs on Tuesday.
Customs officials will begin collecting the border tax August 23, the Office of the U.S. Trade Representative said.