LONDON, May 10 — British finance minister Philip Hammond said today he was hopeful the United States and China would step back from a potential trade war that risked causing very serious damage to Britain and the world economy.

The United States increased tariffs on US$200 billion (RM831 billion) worth of Chinese imports yesterday while the two countries were in the midst of last-ditch talks to rescue a trade deal, a development Hammond described as “disappointing”.

“A full-blown trade war would have a very serious dampening effect on the whole global economy, including the UK, but I think we’re a way away from that and I hope this will be resolved,” Hammond told broadcaster Sky News.

“It is disappointing to see what looks like a setback in that process, but I’m optimistic that in the end there will be a deal between China and the US That’s very important for us,” he added.

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While British exports to China are relatively small, the United States is Britain’s largest trade partner after the European Union, and its open economy is heavily exposed to global downturns.

A spokeswoman for Prime Minister Theresa May told reporters earlier today Friday that Britain was concerned by the US decision to raise tariffs on imports from China to 25%.

“Nobody benefits from trade wars,” the spokeswoman said.

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Britain recorded its biggest-ever trade deficit in goods and services during the first three months of 2019, according to official figures released earlier today, dragging on first-quarter economic growth.

This appeared to reflect businesses sucking in imports ahead of Britain’s planned departure from the European Union on March 29, though there was also a surge in gold imports, which are typically volatile from month to month.

Hammond said he believed the economy was still on track to meet official forecasts of 1.2% economic growth this year. — Reuters