In response to new US tariffs, Chinese Foreign Ministry spokesperson Hua Chunying reiterated that China doesn’t want a trade war, but it isn’t afraid of fighting one. She added that China will take counter-measures if the US is bent on putting more tariffs.

Senior Chinese diplomat Wang Yi also warned “additional tariffs is definitely not a constructive way to resolve economic and trade frictions. Hu Xijin, editor-in-chief of the government backed hawkish Global Times newspaper, said “new tariffs will by no means bring closer a deal that the U.S. wants; it will only make it further away.”

At this point, it’s uncertain what retaliation China would take yet. Possible measures include banning export of rare earth, and penalties against US companies in China, tariffs on crude oil and aircrafts, formalizing the “unreliable entities”, etc.

In an editorial in the official China Xinhua, it’s set that China and the US “reached agreements” on some issues in the trade talks. And both sides agreed to set up a “work mechanism” to keep close communications.

But there are “considerable differences” that still exist on some issues and “continued hard work is required for more progress”.

White House economic adviser Larry Kudlow said yesterday that there was “quite constructive” telephone conversations at deputy level between US and China and trade. The deputies have agreed to set up another conference call and were working through some of the key issues.

Kudow added “we are still planning for the Chinese team to come over here in September.”

On the economy, Kudlow dismissed the concerns of a downturn. Instead, he said “we don’t anticipate anything but a solid strong economy.”