President Donald Trump on Friday announced that the USA could impose additional tariffs on more than $500 billion in Chinese imports, or roughly the total amount of Chinese imports annually into the US, according to an article from Reuters.
Retaliatory measures "took effect immediately", said a Chinese foreign ministry spokesman, Lu Kang.
"In a statement released shortly after the midnight ET, China's Ministry of Commerce called the tariffs - which impose a 25% duty on $34 billion worth of Chinese exports to the U.S. - "typical trade bullying" and warned that retaliation would be swift".
"We are forced to make a necessary counterattack to protect the core profits of the country and the interests of people", it said in expressing readiness to take reciprocal measures against the United States.
Companies worry that the spiraling dispute could chill global economic growth, but Asian financial markets took yesterday's developments in stride.
USA tariffs on $34bn (£25.7bn) of Chinese goods have come into effect, signalling the start of a trade war between the world's two largest economies. "We have been in trade deficits with almost every country across the globe for years, and the President wants to ensure that that doesn't continue". "For example, they can quarantine [U.S.] products for a long time".
He described the potential escalation to reporters aboard Air Force One: "Thirty-four, and then you have another 16 in two weeks and then, as you know, we have 200 billion in abeyance and then after the 200 billion we have 300 billion in abeyance. OK?" He also acknowledged the multi-hundred billion dollar us trade deficit with China.
Trump has threatened to impose additional tariffs on Chinese goods if Beijing fails to accede to his demands and instead retaliates.
Initially Chinese President Xi Jinping appeared to relent with the suggestion that they may lower tariffs on imports of USA auto imports to the country.
Trump maintains the tariffs will pressure China to address trade complaints from the U.S., including intellectual property theft.
This ship, carrying tons of US soybeans, had been racing against the clock across the sea, trying to arrive in Dalian port before the tariff war started.
To be sure, signs of nervousness were evident in markets with the Japanese yen and the Swiss franc firm against the dollar while core USA and German bonds in demand.
One thing contributing to the unease, said University of Massachusetts Dartmouth economist Michael Goodman, is the global nature of the supply chain.
China says it has filed a second complaint to the World Trade Organization over the United States' move to impose tariffs on Chinese goods.
Beijing hit back on Friday with tariffs worth $34bn and has said it will match Trump's $50bn threat.
The start of the trade war also likely confirms the widening rupture between Trump and his own Republican Party, a traditional champion of free trade and big business.
"While China's trade behavior is troubling, diplomacy through constructive bilateral processes can achieve the desired objectives without the disproportionate harm to the U.S.", Chandler suggested in a post on the CTA website.
"While our 900 member companies continue to suffer from not having a level playing field in China, they are still extremely clear: Increased tensions in the U.S".