Tariffs on each side totaling $3 billion sounds like a lot of money, but is a small percentage of all the goods and services traded between the two nations.
Following an investigation, the U.S. Trade Representative (USTR) said it found the practices of China's government related to technology transfer, intellectual property, and innovation to be discriminatory. China's tariffs, if enacted, would double the current levy on US cars, to 50 percent. Late on Tuesday, the Trump administration announced 25 per cent tariffs on US$50 billion of annual imports from China, covering around 1,300 industrial technology, transport and medical products.
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The tit-for-tat action comes hours after Washington detailed about 1,300 Chinese products it meant to hit with tariffs - also set at 25%.
The Chinese Commerce Ministry said the date the tariff hikes take effect depends on whether the USA actually moves to raise its duties. "China urges the United States to resolve China's concerns as soon as possible, resolve bilateral differences through dialogue and consultation, and avoid damage to the broader array of Chinese-US cooperation".
"The financial trigger is once again trade war worries", said Alec Young, managing director of global markets at FTSE Russell.
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The moves triggered further heavy selling in global stock markets and commodities, with US stock futures sliding 1.5 percent, soybean futures plunging 3.7 percent and the dollar and China's yuan both hit. But they could also hurt USA companies or individuals that don't do any exporting, if they have to pay higher costs for imported products.
Outside of Brazil, the United States and Argentina, about 17 million tonnes of soybeans comes from a handful of countries. While the dispute centers around a $375 billion goods trade imbalance in favor of China, the U.S.is also now targeting high-tech sectors that Beijing sees as the future for its economy, prompting an angry reaction.
China said it would place 25% trade tariffs on 106 U.S. goods, including soybeans, cars and orange juice.
A man walks by an electronic board displaying stock trading index at a brokerage house in Beijing, Tuesday, April 3, 2018.
China is the world's biggest pork producer and consumer and its industry relies on soybean meal, a product of soybean crushing, to feed its pigs.
Western Edge Seafood's long-time procurement manager Don Kelley said he didn't expect seafood would be included in the list of products targeted for tariffs by the Donald Trump administration prior to its announcement. When asked whether global markets were now officially observing an all-out trade war, Goldman Sachs' chief global equity strategist, Peter Oppenheimer, told CNBC: "I think it is clearly a trade battle at the very least".