Stocks plummet as China reveals plans to impose tariffs on US

China has announced plans to raise tariffs on $3 billion worth of US goods, just hours after Donald Trump directed US trade representative to level tariffs on around $50 billion worth of Chinese imports to the US.

CNN says that “despite the timing” of the announcement, China has not labelled the measures a “direct response to Thursday's broadside from the Trump administration”.

China has compiled a list of 120 products, The Washington Post reports, “including fresh fruit and wine”, that it intends to impose 15% tariffs on unless the two countries can resolve their trade differences “within a stipulated time”.

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Further tariffs of 25% on other products, such as pork and aluminium, may also be imposed once China has evaluated the impact of recent US measures.

As one of the biggest buyers of US crops in the world, it could chose to target soybeans or sorghum imports with new tariffs, or buy more from countries such as Brazil and Argentina.

China’s state tabloid, the Global Times, said in an editorial this week: “If China halves the proportion of the US soybean imports, it will not have any major impact on China, but the US bean farmers will complain. They were mostly Trump supporters. Let them confront Trump.”

Another area China could exploit is its position as a major market for the US’s single largest exporter, Boeing. The authorities could instruct Chinese airlines to place more orders for rival Airbus planes in the future, which could make Boeing “vulnerable in the long term”, says CNN.

The option of last resort, which could have huge consequences for the US and global economy, would be for China to cut some of its US debt holdings. It is currently the biggest creditor to the US and owns more US government bonds than any other country, giving it considerable bargaining power if Trump decides to embark on a full-scale trade war.

China has repeatedly stated its desire to avoid that scenario, but in response to this week’s escalation, its ministry of commerce said the country “will certainly take all necessary measures to resolutely defend its legitimate rights and interests”.

Trump’s announcement yesterday and China’s reaction today have sent stock markets tumbling around the globe, as fears of a full-blown trade war between the world’s two largest economies grow.