The Trump administration has taken the first steps in imposing tariffs on $US60 billion of Chinese goods, a move that could result in a global trade war.
Primed for economic combat, President Donald Trump has set in motion tariffs on as much as $US60 billion in Chinese imports to the US and accused the Chinese of high-tech thievery, picking a fight that could push the global heavyweights into a trade war.
China threatened retaliation, and Wall Street cringed, recording one of the biggest drops of Trump's presidency. But he declared the US would emerge "much stronger, much richer".
It was the boldest example to date of Trump's "America first" agenda, the culmination of his longstanding view that weak US trade policies and enforcement have hollowed out the nation's workforce and ballooned the federal deficit. Two weeks ago, with fanfare, he announced major penalty tariffs on steel and aluminium imports that he said threatened national security.
However, even as Trump was talking tough at the White House, his administration moved to soften the sting of the metal tariffs, telling Congress on Thursday that the EU, Australia, South Korea and other nations would join Canada and Mexico in gaining an initial exemption. And that raised questions about whether his actions will match his rhetoric.
China responded early on Friday by announcing a list of US goods, including pork, apples and steel pipe, it said may be hit with higher import duties.
The Commerce Ministry said the higher US tariffs "seriously undermine" the global trading system. The ministry urged the US "to resolve the concerns of the Chinese side as soon as possible", and appealed for dialogue "to avoid damage to overall Chinese-US co-operation".
At home, investors on Wall Street showed their rising concern about retaliation and business-stifling cost increases for companies and consumers. The Dow Jones industrials plunged 724 points.
Trump himself, joined by supportive business executives, complained bitterly about the nation's trade deficit and accused China of stealing America's prized technology.
"Anyway you look at it, it is the largest deficit of any country in the history of our world. It's out of control," Trump said of the US-China imbalance. The US reported a $US375 billion deficit with China last year, which Trump has blamed for the loss of American jobs and closing of plants.
The president said the tariffs could cover "about $US60 billion" in trade with China, but senior White House officials said the US Trade Representative had identified 1300 product lines worth about $US50 billion as potential targets.
That list will include aerospace, information and communication technology, and machinery, according to a USTR fact sheet. But further details were scant.
The order signed by Trump directed the trade representative to publish a list of proposed tariffs for public comment within 15 days.
Despite Trump's confident words, business groups and Republican lawmakers are worried his tariffs could undercut actions they have welcomed in his first year.
Dozens of industry groups sent a letter last weekend to Trump warning that "the imposition of sweeping tariffs would trigger a chain reaction of negative consequences for the US economy, provoking retaliation, stifling US agriculture, goods, and services exports, and raising costs for businesses and consumers".
The move against China comes just as the US prepares to impose tariffs of 25 per cent on imported steel and 10 per cent on aluminium - sanctions that are meant to hit China for flooding the world with cheap steel and aluminium.