On Wednesday, China hit back at the U.S. by announcing a list of its own new tariffs on 106 products from the U.S., a move that likely will increase global tensions over worry of a trade war between the two largest economies in the world.
The start date of the new tariffs will be announced at another date, though the Ministry of Commerce in China said that the tariffs are set up to target as much as $50 billion of products from the U.S. annually.
The levy of 25% on imports from the U.S. includes products like cars, whisky and soybeans, said officials in Beijing.
The new tariffs were announced by China less than a day after U.S. President Donald Trump released a list of imports from China that the White House administration will target as part of its crackdown on what has been called by the president unfair trade practices.
The proposed tariffs by the president cover products used in sectors such as information technology, robotics, aerospace, and communications technology.
The showdown in trade tariffs between the U.S. and China has shaken Wall Street and fueled fears in the markets that the escalating dispute could evolve into a full trade war.
One global trade strategist said that what is taking place now is a trade battle but has not yet reached the point of a trade war, but the market’s anxiety reflects the idea it could turn into a legitimate trade war.
The countermeasures proposed by China prompted stock futures in the U.S. to plunge prior to the open on Wednesday. Futures just after 5:00 a.m. ET dropped 415 points which would represent a drop at the open of 393 points on the Dow. Both the S&P 500 and Nasdaq also show futures that represent heavy losses at the start of business Wednesday.
Meanwhile, the announcement on Wednesday has also prompted stocks in Europe to extend their losses with the Stoxx 600 dropping shortly after news of the tariffs was announced.
A global strategist in New York said he believes that Beijing is keen on showing the world it will not be bullied, and is positioning itself as responding to aggression from the U.S. instead of being a part of the overall problem.
The yuan in China took its biggest fall for one day against the U.S. dollar in close to two weeks after news of the new tariffs was released.