Washington on Tuesday announced a list of 10 per cent tariffs on $200 billion in Chinese goods, escalating a trade war between the economic giants. It includes hundreds of food products as well as consumer goods tobacco, chemicals, coal, steel and aluminum.
The tariffs will not go into effect immediately but will undergo a two-month public comment period.
The move comes after the United States imposed 25% tariffs on Chinese goods worth $34 billion last week. Beijing immediately responded with its own tariffs on US goods worth $34 billion. Each side is planning tariffs on a further $16 billion in goods that would bring the totals to $50 billion.
"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," U.S. Trade Representative Robert Lighthizer said in a statement. "Rather than address our legitimate concerns, China has begun to retaliate against U.S. products," he added.
China’s commerce ministry said on Wednesday it was “shocked” and would complain to the World Trade Organisation, but did not immediately say how it would retaliate. In a statement, it called the U.S. actions “completely unacceptable”.
"The action from the US is hurting China, hurting the whole world and also hurting the US itself," the ministry said.
Investors fear an escalating China-U.S. trade war could hit growth and damage sentiment. Hong Kong and Shanghai stocks sank on Wednesday. MSCI's index of Asia Pacific shares outside of Japan tanked 1.08 percent in Asia morning trade.
"The problem is, we don't know where this is going in the future. That could hit business investment, it could hit employment creation and it could damage confidence as we're seeing in the financial markets a bit this morning," Erik Norland, senior economist at CME Group, told CNBC.
With reporting by Reuters and CNBC