Donald Trump has signalled the start of a trade war by imposing US tariffs on $34 billion (£25.7 billion) of Chinese goods.
The US President imposed the 25 percent tariffs at 12:01 am Washington time on Friday. China soon retaliated with a 25 percent tariff on US goods.
Gao Feng, a spokesperson from the Commerce Ministry, said: “China will not bow in the face of threats and blackmail.”
“The Chinese side, having vowed not to fire the first shot, is forced to stage counter-attacks to protect the… interests of its people,” he added.
Trump initially threatened to impose tariffs on Chinese goods in March. He tweeted: “When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win.”
The US has imposed tariffs on over 800 goods including medical devices, industrial goods and auto parts.
China’s tariffs will affect over 500 different US items.
The new tariffs have had little impact on Asian stocks. Shanghai fell in morning trade before recovering and ending 0.6 percent higher. Hong Kong and Tokyo rose by 1.3 percent.
Mark Weisbrot, co-founder of the Washington DC-based Centre for Economic and Policy Research, said the effects of the tariffs could remain fairly limited.
“I don’t think that a serious trade war is in the making. The quantity of goods affected is still small (about 1/6 of one percent of US GDP for the tariffs on Chinese imports). Trump has so far been mostly interested in promoting the interests of America’s biggest corporations, despite occasional rhetoric to the contrary,” he said.
“They don’t want a trade war and neither do the Chinese. Trump doesn’t even want anything that will push stock prices down. So, although Trump is unpredictable, if I had to bet, I would bet there won’t be any serious economic damage coming from trade wars in the foreseeable future.”
Trump threatened on Thursday to up the goods subject to tariffs to over $500 billion.