"The outburst of large-scale mutual levying of tariffs between China and the United States will inevitably destroy Sino-US trade", assistant minister of commerce Li Chenggang told a forum in Beijing on Wednesday. High-level talks between the two countries starting in May failed to deliver a breakthrough to head off a trade war.
National Retail Federation senior Vice President for Government Relations David French said the move "doubles down on a reckless strategy that will boomerang back to harm us families and workers". The index had gained for the past two sessions, having enjoyed a lull from the trade war fears that lashed global markets last week.
"As a result of China's retaliation and failure to change its practices, the president has ordered USTR to begin the process of imposing tariffs of 10 percent on an additional $200 billion of Chinese imports", he said in a statement.
Following the introduction of reciprocal tariffs on $34 billion of the others imports on Friday, the United States, as promised, has announced a new list of 6,000 Chinese goods, totaling $200 billion, that may be hit with additional 10% tariffs by the end of next month.
Announcing proposals for the new tariffs, US Trade Representative Robert Lighthizer said: "For over a year, the Trump administration has patiently urged China to stop its unfair practices, open its market, and engage in true market competition".
"The markets still remain sensitive to the trade-related theme, which is something investors have to take into account for the long term", said Yoshinori Shigemi, global market strategist at JPMorgan Asset Management in Tokyo.
But China has rebuffed USA complaints and denied any harm was done to US companies, and instead retaliated "without any worldwide legal basis or justification", Lighthizer said.
Officials later issued a list of thousands of Chinese products the White House wants to hit with new tariffs, including hundreds of food products as well as tobacco, chemicals and coal.
China's government vowed Wednesday to take "firm and forceful measures" as the USA threatened to expand tariffs to thousands of Chinese imports like fish sticks, apples and French doors, the latest salvo in an escalating trade dispute that threatens to chill global economic growth.
Calling Washington's behavior irrational, Beijing warned that the USA is, in the first instance, hurting itself with protectionist measures and constant attacks on free trade.
The US complains that China uses predatory practices in a push to challenge American technological dominance. "If the USA goes ahead with more, China needs a combination of tools and it is prudent to guard against downside risk to growth too".
The Trump administration on July 6 imposed 25 per cent duties on US$34 billion in Chinese imports, the first time the president has implemented tariffs directly on Beijing after threatening to do so for months.
The ministry said it "solemnly protests" the latest tariff list published by Washington, calling it "totally unacceptable". Those nations have also retaliated.
China, however, has explicitly excluded LNG from its list of US energy goods that may be subject to tariffs, as it seeks to fight air pollution by a massive switch from coal-fired to gas-fired residential heating.
"But more tariffs like these will punish America's manufacturing workers - and could undermine our hard-won gains thanks to tax and regulatory reform".
The list of big decliners included exporters to China, such as Caterpillar, which fell 3.2 per cent, Boeing, down 1.9 per cent and Deere & Company, down 2.2 per cent.
Meanwhile, farmers hurt by Chinese tariffs on USA agricultural exports pose a political risk for Mr. Trump and for Republicans, especially as the November midterm elections loom.