WASHINGTON/TOKYO -- The Chinese government on Friday retaliated immediately against U.S. President Donald Trump's $34 billion tariff package with a simultaneous set of countermeasures, and accused Washington of starting "the largest trade war in history."
Beijing's move sets the stage for escalating conflict, with Trump already threatening to hit Chinese imports worth up to $500 billion, amid widespread concerns about disruption to bilateral and global trade and the risk of damage to the world economy.
China imposed its own tariffs on U.S. goods worth $34 billion seconds after the Trump administration's launch of 25% import tariffs on $34 billion worth of Chinese goods, such as industrial robots.
A "trade war is never a solution," Chinese Premier Li Keqiang told reporters in Sofia, Bulgaria, on Friday, according to Reuters. "China would never start a trade war but if any party resorts to an increase of tariffs, then China will take measures in response to protect development interests."
"The U.S. has started the largest trade war in history," China's Ministry of Commerce said on its website, stating its intention to bring the matter to the World Trade Organization while stressing the government's commitment to making business easier for foreign companies.
The U.S. trade representative has sent out a note declaring that any goods entering the country or withdrawn from warehouses at or after 12:01 a.m., Eastern Daylight Time, will be subject to the tariffs. The levies will apply to 818 types of products arriving in the U.S., including automobiles, semiconductors and industrial machinery.
Among Washington's greatest concerns is "Made in China 2025," Beijing's ambitious initiative to become a global leader in technology-related industries such as semiconductors. The U.S. is worried this may accelerate forced transfers of intellectual property by foreign companies operating in China, and other unfair business practices. In addition to the tariffs, the U.S. government is reportedly planning to cap Chinese investments in U.S. technology companies.
The tariffs will be applied to goods shipped from factories in China to the U.S., meaning that the supply chains of not only Chinese companies but also those that use the country as a point of transit would be affected. The potential ripple effects have raised fears of a slowdown in global trade and the impact it would have on economic growth around the world.
Speaking on Air Force One as he headed for Montana on Thursday, Trump said that the initial tariffs would be followed by "another 16 [billion dollars] in two weeks."
The president threatened that ultimately, the U.S. could impose tariffs on in excess of $500 billion worth of goods, if Beijing does retaliate. "We have $200 billion in abeyance and then ... we have $300 billion in abeyance. OK? So we have 50 plus 200 plus almost 300," Trump said.
An all-out trade war between the U.S. and China would risk sinking global growth by forcing companies to seek new buyers and suppliers for goods that become considerably more expensive.
Most Asian stock markets were down in early trading on Friday but pared the losses after the tariffs kicked in.
China's benchmark Shanghai Composite Index fell as much as 1.6% in the morning but swung to a 0.8% gain after the lunch break. Similarly, Hong Kong's Hang Seng index was trading lower for the fourth straight day but was up by as much as 0.7% after the tariffs took effect.
Initially, market watchers said investors were relieved that China did not immediately retaliate, but that was because China only confirmed its countermeasures hours after the U.S. move. The trade tensions have hit markets hard; the Shanghai Composite is hovering near a two-year low.