China has reacted strongly to the United States' announcement of new tariffs on US$200 billion (S$272 billion) of Chinese goods, calling it "totally unacceptable" and "typical bullying", and warning that Beijing will take counter-measures.
But given that China imported only US$130 billion of goods from the US last year, it will not be able to impose reciprocal tariffs and will have to look for other ways to hit back.
"It is totally unacceptable for the US to accelerate matters by announcing a (new) tariff list," the Commerce Ministry said in a statement yesterday.
"The Chinese side is shocked by the action of the US," it said, adding that in order to safeguard the core interests of the country and its people, the Chinese government "has no option but to take the necessary counter-measures".
The Foreign Ministry, at its regular press briefing, called the move "typical trade bullying", and urged the international community to work together to "resolutely resist unilateralism, oppose protectionism and maintain the multilateral trading system".
The Chinese were responding to Tuesday's statement by US Trade Representative Robert Lightizer that President Donald Trump had ordered him to begin the process of imposing tariffs of 10 per cent on an additional US$200 billion of Chinese imports.
This was the "result of China's retaliation and failure to change its practices", the statement said, in reference to Beijing's retaliatory tariffs after the US last Friday imposed 25 per cent tariffs on US$34 billion of Chinese goods it imports, with tariffs on another US$16 billion to kick in soon.
The US is levying these tariffs because of what it describes as China's unfair trade practices, including forcing US companies operating in China to transfer technology to the Chinese.
"Rather than address our legitimate concerns, China has begun to retaliate against US products. There is no justification for such action," said Mr Lightizer.
Stock markets around the globe fell as the latest US announcement and the Chinese response indicated a deepening and protracted trade conflict between the world's two largest economies that could hit global trade and growth.
In Asia, the Shanghai Composite closed 1.8 per cent down, Hong Kong's Hang Seng was 1.3 per cent down, and Tokyo's Nikkei fell 1.2 per cent. The London FTSE 100 dropped 1.2 per cent, while the Dow Jones Industrial Average was down nearly 0.6 per cent in early trading.
In the US, some lawmakers and business groups criticised the latest US move.
The Retail Industry Leaders Association said in a statement: "American retailers and the families we serve barely had time to process the barrage of tariffs implemented last week. Now, we will need to grapple with new tariffs on an additional US$200 billion worth of imports, which are bound to include even more consumer products and everyday essentials."
The hard-hitting statement from the vice-president of international trade Hun Quach accused Mr Trump of breaking his promise to bring "maximum pain on China", saying that "American families are the ones being punished" instead.
The US Chamber of Commerce, which had supported Mr Trump's domestic tax cuts, was less enamoured of his tariff policies.
"Tariffs are taxes, plain and simple. Imposing taxes on another US$200 billion worth of products will raise the costs of everyday goods for American families, farmers, ranchers, workers and job creators. It will also result in retaliatory tariffs, further hurting American workers," a spokesman was quoted as saying by Reuters.
Senate Finance Committee chairman Orrin Hatch, a Republican, said the move "appears reckless and is not a targeted approach".
As for China, the additional tariffs will hit its export sector hard, IHS Markit's Asia-Pacific chief economist Rajiv Biswas said in a note.
The sector will "suffer a significant deterioration in export competitiveness to the US compared to other emerging markets' manufacturing exporters, such as Vietnam, South Korea, Thailand, Bangladesh, Mexico and Brazil".
However, this will be partly offset by the significant depreciation of the yuan from around 6.28 to the US dollar in February to 6.63 on Tuesday, he added.
While China has vowed to hit back with counter-measures, it cannot use reciprocal tariffs as its imports of US products are vastly smaller than its exports.
Some analysts have suggested that China could reduce the number of Chinese tourists to the US and boycott US services.
Chinese economist Hu Xingdou, however, suggested that China should keep control of the situation and take measures to prevent the trade conflict from expanding into a technological conflict.
These include playing down its Made in China 2025 strategy to move up the industrial value chain, which the US has criticised.