U.S. Trade Representative Robert Lighthizer on Tuesday evening unveiled a proposed list of more than 6,000 products to be hit with 10-per-cent import taxes. But China only bought about $135 billion in US goods a year ago, meaning it will run out of American products to tax before it matches Trump's latest move.
The Trump administration said the proposed list, which would put 10 percent tariffs on thousands of different categories of Chinese imports, is needed to increase the pressure on Beijing to change what the USA calls unfair trade practices. "Unfortunately, China has not changed its behaviour - behaviour that puts the future of the U.S. economy at risk".
The first round of tariffs covered Chinese products ranging from farming plows to machine tools and communications satellites. Tariffs could stifle hundreds of billions of dollars' worth of projects - including new pipeline infrastructure needed to get oil and natural gas from the prolific Permian Basin to markets.
"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", Lighthizer said.
The Chinese state-run press has reportedly been instructed on how to report on the current trade conflict between China and the US.
"The Trump administration is gambling that by wielding such a big club, it will force China to back down", said Edward Alden, a senior fellow at the Council on Foreign Relations.
- The Chinese government vowed Wednesday to take "firm and forceful measures" against US threats to expand tariff hikes to thousands of products like fish sticks, apples and French doors as their trade dispute escalates.
Unfortunately for markets, no end is in sight, with further retaliatory levies nearly certain to be enacted by China in the coming days or weeks.
Australia's dollar, often seen as a proxy for China's economic fortunes due to Australian raw materials exported there, was 1.09 percent lower.
Trade war with the world: United States tariffs on aluminum and steel from Canada, the European Union and other countries have also triggered retaliatory tariffs on U.S. goods. The President imposed steel and aluminum tariffs on these countries, and has threatened to hit them with levies on imported cars and trucks.
American Airlines plummeted 8.1 per cent after it trimmed its estimate for revenue per seat mile for the second quarter.
Republican senators expressed concern over the escalation of US tariffs.
While disclosing a strategy of "splitting apart different domestic groups in USA", the notice explains: "The trade conflict is really a war against China's rise, to see who has the greater stamina". The Trump administration has tried to limit the impact of the trade war on consumers and any backlash that it might prompt, but the scale of these tariffs make it next to impossible to protect them.
"Americans like cheap goods".
The fallout has been acutely felt by soybean producers and other agricultural sectors in the Midwest - prompting even some members of Trump's own party to voice alarm.
Chief investment officer at Bleakley Financial Group, Peter Boockvar, said: "At this point I'm hoping for more science in searching for a deal and less art".