The spectre of a trade war looms over Asia, after US President Donald Trump's announcement of planned heavy tariffs on Chinese imports drew a swift threat of proposed retaliatory measures.
Beijing's Commerce Ministry said it was readying tariffs on 128 products imported from the US worth US$3 billion (S$3.9 billion). These could include a 15 per cent tariff on fruits and steel pipes, and a 25 per cent tax on pork products.
China's riposte came hours after Mr Trump signed a presidential memo that could impose tariffs on up to US$60 billion (S$79 billion) of imports from China. The measures have a 30-day consultation period.
Chinese Foreign Ministry spokesman Hua Chunying yesterday said US sanctions smacked of unilateralism and protectionism, and Washington's assertions of intellectual property (IP) theft ignored the fact that China has strengthened its IP protection.
"China will not sit idly by while its interests are jeopardised," she told reporters at a regular press conference. "We have made sufficient preparations and will firmly defend our legitimate interests."
Her remarks came on the heels of strong words by China's ambassador to the US, who said China was prepared for a long trade fight.
"If people want to play tough, we will play tough with them and see who will last longer," Ambassador Cui Tiankai said in a video posted on the embassy's Facebook page.
Economists said the Chinese response to tariffs Mr Trump had long promised was a clear warning shot to the United States to temper the list of items it wants to impose tariffs on, adding that Beijing knew where Washington's pain points are.
ING's economist for Greater China Iris Pang noted that China had prepared a detailed list of the items that it is threatening to impose taxes on, while Mr Trump's memo gives the US Trade Representative office a fortnight to come up with America's proposed list.
"This is China sending an important message: I have a concrete list when you don't have one yet, so you still have time to change your list and your tariff percentages before it is too late," she said.
OCBC economist Selena Ling said South-east Asia and Singapore will see some spillover impact.
"Singapore, as a small open economy, is heavily dependent on trade and investment flows, and any protectionist hurdles would generally be adverse," she said.
"The risk of further escalation cannot be discounted now if cooler heads do not prevail."
If there is a silver lining, it is that exporters outside China of products targeted by sanctions might benefit from a degree of trade diversion, and could see more foreign investment as companies reassess their global supply chains, said DBS senior economist Irvin Seah. US importers could switch to countries such as Korea, Vietnam, Thailand and Malaysia, he added.
Ms Pang said the brinkmanship by both sides also makes it difficult to return to the negotiating table: "Once you start down this road, it is tough to wind things back as that would mean you are going soft on your trade enemy - at this point, you are no longer trade partners."
The tit-for-tat comes amid global concern over the Trump administration taking a hawkish stance, with Secretary of State Rex Tillerson being replaced by Central Intelligence Agency director Mike Pompeo, and National Security Adviser H.R. McMaster ousted in favour of former diplomat John Bolton yesterday.
The planned US measures have also sparked concern across Asia.
A Japanese Foreign Ministry spokesman told The Straits Times the measures could have a significant negative impact on Japan-US ties, the global economy and the multilateral trading system.
Singapore Foreign Minister Vivian Balakrishnan said trade wars were "a very bad idea".
"We need to avoid measures that ultimately will inflict pain on ourselves, will lead other countries to retaliate, and undo the formula for peace and prosperity that has worked for 70 years," he added.