The president said USA tariffs on an additional $16 billion in Chinese goods are set to take effect in two weeks.
Chinese officials on Thursday said they were prepared to respond with tariffs on $34 billion worth of American goods, raising serious concerns among industry leaders in the US agricultural, manufacturing and technology sectors and increasing the odds of billions more in import taxes for both countries in the coming months.
But if the scope of the tariffs widened then New Zealand could be affected - either through intermediary goods sold into the U.S. or China for further processing or because markets were disrupted more broadly. The damage would threaten to undo numerous economic benefits of last year's tax cuts.
China has said it would respond with tariffs on hundreds of U.S. goods, including top exports such as soybeans, sorghum and cotton, threatening USA farmers in states that backed Trump in the 2016 U.S. election, such as Texas and Iowa.
"China promised that it would not fire first, but it has been forced to take necessary measures to defend the core interests of the country and its people", the statement said.
The two countries have engaged increasingly in verbal sparring in recent months, but Friday's pair of haymakers has dramatically escalated the trade dispute - and that has investors across the world worries about what comes next.
"The US´s measures are essentially attacking the global supply and value chain".
"The worldwide financial crisis, which ensured that we now act in the framework of the G-20, would never have been resolved so quickly, despite the pain, if we hadn't cooperated in a multilateral fashion in the spirit of comradeship", Merkel said on Wednesday.
"The tariffs are aimed at patent-intensive industries that rely on global supply chains, disadvantaging American producers and harming United States allies operating in the region", the PIIE analysis concludes.
Why Soybeans Are at the Heart of the U.S.
Substantial they may be, but the average US consumer will likely not see these impacts directly for a little while.
Growing trade tension worries some top officials of the USA central bank. I fought hard for them and ultimately they will not pay tariffs selling into the European Union, which has hurt us badly on trade, down to $151 Billion. Jeremy Haft, author of Unmade in China, tells NPR's Noel King that Beijing has a number of arrows in its economic quiver, and that it is "already using these weapons". Many countries, including India, have complained that there are too many restrictions on American exports that they actually want, and Washington simply wants to unload its excesses, such a chicken legs, on countries that don't particularly need them. "For example, they can quarantine [U.S.] products for a long time". When products on the list for extra levies are declared to customs, the importer will pay the additional levies. "Our position remains consistent and very clear".
China's tariffs on hundreds of USA goods include top exports such as soybeans, sorghum and cotton, threatening U.S. farmers in states that backed Trump in the 2016 U.S. election, such as Texas and Iowa.
Given the moves were widely telegraphed, financial markets took them in stride.
Some veteran China observers predict Beijing's tactics may go beyond tariffs to include arbitrary quarantines and a costly uptick in customs inspections, among other regulatory headaches.