China open to tariff talks with US but wants trade loss offset

Chinese Premier Li Keqiang told visiting US policymakers on Tuesday that China is working towards dialogue with the United States on trade but is prepared for a trade war, state television reported.

On footage shown by China Central Television, Mr Li also said during the meeting with US senators he hopes the United States will take a rational attitude to trade and work with China towards a common solution, Reuters reported.

Earlier, China asked the US to provide compensation for lost trade as a result of US President Donald Trump's proposed tariffs on steel and aluminium, in a preliminary step that could lead to a dispute between the two nations at the World Trade Organisation, according to Bloomberg.

In two filings with the WTO on Monday, China dismissed the US's assertion that the metal tariffs were instituted on national security grounds, arguing instead that they were safeguard measures - temporary trade restrictions aimed at protecting domestic producers.

China responded to the US action by threatening to impose tariffs on $3 billion of US imports - including agricultural, steel and aluminium products - and its ambassador to the US said all options are on the table, although the Asian superpower does not want a trade war. The levies are expected to affect $689 million worth of Chinese steel and aluminium exports to the US, according to data published by the Peterson Institute for International Economics.

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WTO chief warns trade barriers will 'jeopardise global economy'

China hits back at Trump tariffs as trade war finally arrives

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If the US rejects China’s argument that the measures are safeguards, China may have recourse to ask the WTO to mediate the disagreement in a formal dispute proceeding. China said it reserved the right to file a dispute at a later date, according to the filings.

Separately, the European Union took the first step toward protecting EU-based steel manufacturers on Monday when the European Commission opened a “safeguard” investigation into whether the 25 per cent levy on foreign steel imposed last week by Mr Trump is diverting worldwide shipments to the EU market.

The investigation marks the defensive part of a three-pronged strategy that the EU has drawn up to respond to the US steel tariff and to a 10 per cent levy on foreign aluminium.

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