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BEIJING (Reuters) - The United States asked China in a letter last week to cut the tariff on U.S. autos, buy more U.S.-made semiconductors and give U.S. firms greater access to the Chinese financial sector, the Wall Street Journal reported on Monday, citing unnamed sources.

FILE PHOTO - A man rides a vehicle past containers at a port in Shanghai, China, February 17, 2016. REUTERS/Aly Song/File Photo

Alarm over a possible trade war between the world’s two largest economies has chilled financial markets as investors foresee dire consequences should trade barriers go up due to President Donald Trump’s bid to cut the U.S. deficit with China.

Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer listed steps that Washington wants China to take in a letter to Liu He, a newly appointed vice premier who oversees China’s economy, the Journal said, quoting sources with knowledge of the matter.

The newspaper reported that Mnuchin was considering a visit to Beijing to pursue negotiations.

Fears of a trade war mounted earlier this month after Trump first slapped tariffs on steel and aluminum imports, and then on Thursday specifically targeted China by announcing plans for tariffs on up to $60 billion of Chinese goods.

On Friday, China fired a warning shot in response to the U.S. tariffs on steel and aluminum by declaring plans to levy additional duties on up to $3 billion of U.S. imports.

Beijing could also inflict pain on U.S. multinationals that rely on China for a substantial - and growing - portion of their total revenues, said Alex Wolf, senior emerging markets economist at Aberdeen Standard Investments.

“This could put U.S. companies such as Apple (AAPL.O), Microsoft (MSFT.O), Starbucks (SBUX.O), GM (GM.N), Nike (NKE.N), etc. in the firing line,” Wolf said.

China can increase the regulatory burden on U.S companies through new inspections and rules; ban travel; stop providing export licenses of key intermediate goods; raise the tax burden on U.S. multinationals in China; or block U.S. companies from the government procurement market, he said.

FLOUTED RULES

Trump unveiled the planned tariffs targeting Chinese goods after a U.S. inquiry found China guilty of intellectual property theft and unfair trade practices, by forcing U.S. investors to turn over key technologies to Chinese firms.

On Saturday, Liu told Mnuchin in a telephone call the U.S. inquiry violated international trade rules and Beijing would defend its interests, the official Xinhua news agency reported.

A U.S. Treasury spokesman confirmed the call, but declined to comment on the content of any letter or on a possible visit by Mnuchin to Beijing.

“Secretary Mnuchin called Liu He to congratulate him on the official announcement of his new role,” the spokesman told Reuters. “They also discussed the trade deficit between our two countries and committed to continuing the dialogue to find a mutually agreeable way to reduce it.”

The Trump administration

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