Trump imposed tariffs on about United States dollars 60 billion worth of Chinese imports to punish the country for its "unfair" seizure of American intellectual property, a move that could escalate the already tense trade relations between the world's two biggest economies. The risk now is that other countries might likewise sidestep the WTO and slap their own tariffs in retaliation, further undermining the WTO.
Why has the United States of America chose to impose these economic tariffs on China? USA stock futures traded lower after the S&P 500 Index closed down 2.5%, the biggest drop in six weeks.
The trade dispute has influenced stock prices in many countries.
"China does not want a trade war with anyone. But China is not afraid of and will not recoil from a trade war", it said in a statement.
China's Commerce Ministry said Beijing was considering a tariff increase of 25 per cent on pork and aluminum scrap, mirroring Trump's 25 per cent charge on steel.
That list will include aerospace, information and communication technology, and machinery, according to a USTR fact sheet.
Beijing unveiled a hit list of products that could face duties of up to 25 percent, from fresh fruit to pork and wine, though it stopped short of pulling the trigger as it indicated its readiness to negotiate an agreement.
"We have heard from many of our trading partners that they share many of these concerns", the official said.
Vice Premier Liu He told Mnuchin in a phone call that the order Trump signed Thursday violates global trade rules, China's official Xinhua News Agency reported. He noted Beijing began a probe of US sorghum in February after Trump announced the steel and aluminum tariffs.
"Chinese retaliation against US wine would put our producers at a significant disadvantage in one of the most important markets in the world at a critical time", said Bobby Koch, CEO of the Wine Institute. Trump also directed Treasury Secretary Steven Mnuchin to propose new investment restrictions on Chinese companies within 60 days to safeguard technologies the USA views as strategic, said senior White House economic adviser Everett Eissenstat. With Beijing's response to the tariffs aimed at intellectual-property abuses-enacted under Section 301 of the USA trade law-as yet unannounced, the relatively limited value of trade curbs may be just the first stage of its response. It followed a seven-month investigation by USTR into allegations China violates United States intellectual property, under the seldom-used section 301 of the 1974 Trade Act. They said the figure was based on a calculation of the impact on the profits of U.S. companies that had been forced to hand over intellectual property as the price of doing business in China. "We are confident and capable of dealing with any challenges. Worries about escalation therefore won't go away".
White House officials told a briefing ahead of the trade announcement that the administration was eyeing tariffs on $50 billion in Chinese goods. The president said Thursday, "It's probably one of the reasons I was elected, maybe one of the main reasons".
"The larger part of China's strategy, though, is to position itself as the good guy in the global economy, protecting the rules of the game from Trump's lawless attacks", he said.
US diplomats, business leaders and many experts, though, blame China for consistently failing to address long-standing demands to open its markets further. "That process has failed".
Mr. Xi "has spent the past few years cultivating the image of a strongman, and it would be very surprising if he were not to retaliate", Ian Shepherdson, chief economist with Pantheon Macroeconomics, said in a client note. "Finally the president decided that we needed to move forward". "'We will end up negotiating these things rather than fighting over them, in my view", Ross said. Lighthizer will have 15 days to release a list of Chinese goods and services that will be targeted, followed by a 30-day public comment period.