China will impose tariffs on US$60 billion (S$82.3 billion) worth of US goods as retaliation for the new 10 per cent tariff that the United States announced on Monday (Sept 17) on US$200 billion worth of Chinese goods.
The Chinese tariffs will take effect next week at the same time as the US tariffs, China's Finance Ministry said late on Tuesday (Sept 18) on its website.
The tariff rates will be 5 per cent and 10 per cent instead of the 5 per cent, 10 per cent, 20 per cent and 25 per cent proposed last month, the ministry said.
China's retaliation risks deepening the trade conflict between the two countries, as US President Donald Trump has threatened further tariffs on up to another US$267 billion worth of Chinese goods - which, in effect, would mean that all Chinese imports would be subject to additional tariffs - should Beijing take countermeasures.
The Chinese Commerce Ministry also said on Tuesday that the US move brought new uncertainties to bilateral consultations. US Treasury Secretary Steven Mnuchin proposed last week that talks be held in Washington to resolve the trade dispute.
China, which planned to send a delegation led by top economic adviser Liu He to the US next week, is likely to call off the visit, reported Hong Kong's South China Morning Post.
The Chinese Foreign Ministry said at a regular press briefing on Tuesday that "dialogue and consultation on the basis of equality, mutual trust and mutual respect are the only proper way to resolve Sino-US economic and trade issues".
"However, the current actions of the US do not reflect sincerity and goodwill," said spokesman Geng Shuang.
Mr Trump's decision on Monday comes on top of an earlier one to impose 25 per cent tariffs on US$50 billion worth of Chinese imports, which was met with reciprocal measures from the Chinese.
Regional markets reacted calmly to Mr Trump's latest move, with Shanghai and Shenzhen finishing up 1.82 per cent and 1.68 per cent, respectively, while Japan gained 1.41 per cent and Singapore edged down 0.07 per cent.
Analysts said the immediate impact of the 10 per cent tariff rate imposed by the US will be limited.
This is because the depreciation of the Chinese yuan against the US dollar since February "has almost entirely offset the effect of the 10 per cent tariff", IHS Markit's Asia-Pacific chief economist Rajiv Biswas said in a note. The yuan fell from 6.27 to the dollar in February to 6.87 on Monday.
But if no US-China trade deal can be reached by the year end and the tariff is raised to 25 per cent, the impact on China's export sector would be far more significant. It will also cause "significant collateral damage" to other Asian economies that are part of the East Asian manufacturing supply chain, said Mr Biswas.
AmCham China, an association of US firms in China, warned in a statement on Tuesday that this new round of tariffs would "cause suffering for US companies in China".
Already, it said, more than half of its members have experienced a rise in non-tariff barriers in recent months, including increased inspections and slower Customs clearance.
Senior Chinese government official Fang Xinghai, vice-chairman of the China Securities Regulatory Commission, expressed confidence that China's economy is strong enough to weather the worst-case scenario of the US imposing tariffs on all Chinese imports.
"Even in that scenario, the negative impact on China's economy is about 0.7 per cent of GDP decline," he said at a meeting of the World Economic Forum in Tianjin on Tuesday.
"China has ample fiscal and monetary policies to cushion that impact. So, we prepare for the worst, and we think the economy will still be fine."
A spokesman for Singapore's Ministry of Trade and Industry, while expressing concern over the escalating trade tension between the world's two largest economies, on Tuesday said it was closely monitoring developments and their impact on the Republic.