"With Beijing canceling planned trade talks on Saturday and the US State Department imposing sanctions against China's defense agency, relations between the two largest economies in the world may further deteriorate".
China slammed the USA on Monday over its "trade bullyism" after $200 billion worth of tariffs went into effect, prompting Beijing to enact retaliatory tariffs on $60 billion in American imports. China retaliated with duties on a further $60 billion worth of American products.
US Treasury Secretary Steven Mnuchin had invited Chinese officials to hold new talks, but President Donald Trump's latest salvo - and warnings that another $267 billion of goods being lined up - appear to have scuttled that effort.
"It is very likely President Trump will announce the process for applying tariffs on the remainder of its goods imports from China in coming weeks with implementation in late 2018 or early 2019", the bank said.
Imports of American goods past year totalled $153.9 billion while the United States bought Chinese goods worth $429.8 billion, according to Chinese customs data.
In a paper published today the Chinese government argued that America "has..."
Beijing hit out at Washington for employing "trade bullyism practices" and "intimidating other countries through economic measures". And President Trump has threatened to tax effectively all of China's imports to the USA - a move China can't match with tariffs alone.
Hong Kong stocks fell, while volumes across Asia were thinner than average due to holidays in the largest markets, China and Japan.The latest round of US duties took effect just after midnight Washington time on Monday (midday in Beijing) on a list of products ranging from frozen meat to television components.
Speaking to Fox news on Sunday, he said: "To the extent one wants to call this a trade war, we are determined to win it".
Among the US items expected to be hardest hit, according to an analysis from the Trade News Centre, are printed circuit boards, desktop computers, computer parts and metal and wooden furniture. Modems, routers, and switching and networking gear have not been exempted from this latest round of tariffs, a move that will hurt consumers, as the U.S. Customs and Border Control agency will not draw a distinction between equipment meant for consumer use and that meant for commercial use.
These accusations against China have poisoned the atmosphere of Sino-US ties, Wang Yi added. Beijing believes substantive negotiations will only be possible after the USA midterm elections in November, Bloomberg News reported.
However, he added that given the current divide between the two sides, the risk of a trade war is "rising".
China's top diplomat State Councillor Wang Yi had a similar message when he spoke to U.S. business leaders in NY.
It affirmed China's stance that it is a developing country, a claim that rankles Washington, Europe and other trading partners.