Stocks sink as new Trump tariff threat spooks investors

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China imported $129.89 billion of United States goods past year, while the U.S. purchased $505.47 billion of Chinese products, according to USA data.

Because China can apply tariffs to U.S. goods worth only $130 billion, Beijing will have to find other ways to execute a proportional response. In a forcefully worded statement, it said Beijing is ready to "defend the interests of the Chinese people and enterprises".

"If the U.S. loses its senses and publishes a new list, China will be forced to take comprehensive measures that are both strong in quantity and gravity and will fight back", it read.

It gave no details.

China couldn't come close to matching America's tariffs on US$450 billion of Chinese exports.

"This latest action by China clearly indicates its determination to keep the United States at a permanent and unfair disadvantage, which is reflected in our massive $376 billion trade imbalance in goods".

In early trading, stocks in France, Germany and the United Kingdom also fell, while Asian markets also declined.

United States tariffs that affect more than 800 Chinese products worth $34bn in annual trade are due to come into effect on 6 July.

Despite investors' jitters over the rising trade rhetoric, Mr. Navarro said the president's action will be "ultimately bullish" for corporate America and US workers.

Derek Scissors, a China scholar at the American Enterprise Institute, a Washington think tank, said that means China will soon run out of imports of United States goods on which to impose retaliatory tariffs.

Cook downplayed concerns about U.S.

In an official statement, Trump said that these new tariffs would be in retaliation for China threatening to impose retaliatory tariffs on USA goods in response to the last round of tariffs imposed on China by the U.S.

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The White House hasn't set a date for the imposition of any new tariffs beyond the initial list.

Chinese regulators also have the option of broadening their retaliation by tying up American companies in tax or anti-monopoly investigations or by denying or revoking licenses. The yield on the US 10-year Treasury fell to 2.89 percent from 2.92 percent.

With support from the Trump administration in the US, the question is whether China will also keep its hands off the iPhone.

Economists warn Washington might be undercutting its negotiating position by alienating potential allies.

"We imported about $500 billion of Chinese exports in 2017 and we exported only $130 billion", Navarro said.

Tuesday's stock market slide has sparked a risk-off trade with money moving into the safety of the US dollar and US Treasurys.

If the USA goes ahead with the new $200 billion tariffs, they are more likely to be directly felt by individuals than the previous round.

"The trade war waged by the United States is against both the law of the market and the development trend of today's world". Neither of those tariffs have gone into effect yet.

In response, Chinese officials vowed to retaliate with their own $50 billion of tariffs on American goods, such as beef, cars, and soybeans.

Monday's announcement comes just three days after Trump officially announced that tariffs on $50 billion worth of Chinese goods would be subject to a new 25% tariff starting July 6.

But the situation could be much worse, because China accounts for one-third of Australia's total exports.

Beijing wants to "demonstrate that things will be done their way or not at all", said Christopher Balding, an economics professor at Shenzhen's HSBC Business School, who believes Chinese policymakers prefer demonstrations of "power and control" over "technical policy rightness".

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