The response to U.S. President Donald Trump's decision to go ahead next week with collecting 10 percent tariffs on another $200 billion of Chinese goods, ratcheting up to 25 percent in January, was unusual and unexpected on Tuesday.
Trump also warned that if China takes retaliatory action against United States farmers or industries, "we will immediately pursue phase three, which is tariffs on approximately $267bn of additional imports".
The US has already imposed tariffs on $50bn (£38bn) on Chinese imports.
Trump also wants to replace the North American Free Trade Agreement, which includes the United States, Mexico and Canada, with a new agreement that would shift more auto production to the US The administration has already reached a deal with Mexico that excluded Canada.
The prospect of a more aggressive trade war with China pushed stocks lower, after investors had previously been largely untroubled by the Trump administration's trade policies.
Former chief economic adviser Gary Cohn tried desperately to convince Trump that tariffs would cost jobs and investment and raise little revenue, at one point telling him that he had a "Norman Rockwell" view of an American economy that bore no relationship to the services-dominated U.S. economy today.
"If the USA launches any new tariff measures, China will have to take countermeasures to firmly ensure our legitimate rights and interests", foreign ministry spokesman Geng Shuang told reporters during a regular press briefing on Monday. China only imports around $130bn from America, meaning it can't simply announce a tit-for-tat retaliation.
Trade-exposed commodities such as copper also lost ground, which seemed logical given the significant escalation in US-China trade tensions.
Beijing has vowed to retaliate on a range of USA products valued at around $60 billion.
The KPMG modelling found Australia would be hit harder by the US-China trade war than the European Union or Japan. "But, so far, China has been unwilling to change its practices".
"This is not an effort to constrain China, but this is an effort to work with China and say, ´It´s time you address these unfair trade practices that we´ve identified that others have identified and that have harmed the entire trading system", the official said.
Trump pulls trigger on $200bn more China tariffs
President Donald Trump said he would announce his latest plan on Chinese commerce after markets closed. Some will bring operations to the United States - one of Trump's goals.
"Contrary to views in Washington, China can - and will - dig its heels in and we are not optimistic about the prospect for a resolution in the short term", said Zarit of the American Chamber of Commerce.
"Our concern with these tariffs is that the USA will be hardest hit, and that will result in lower U.S. growth and competitiveness and higher prices for United States consumers", Apple said in a letter commenting on the proposal.
The lira fell 1.1 percent to 6.2369 TRY= while Russia's rouble dropped 0.2 percent to 68.146 RUB= as the effect of the Russian central bank rate rise on Friday faded.
Chinese chemical inputs for manufacturing and textiles and agriculture eliminated from tariff list.
Earlier yesterday Mr Trump claimed that the consequences of the global trade...
However, if Trump expands the tariffs to an additional $267 billion worth of goods then almost every Chinese import would be affected, including the iPhone, along with all other smart phones. And in a victory for Apple Inc. and its American customers, the administration removed smart watches and some other consumer electronics products from the list of goods to be targeted by the new tariffs.
The Chinese government said last week it welcomed Washington's proposal for more talks, though neither side has given any indication it is willing to compromise.
Officials said they wanted to shield consumer goods from the taxes as much as possible.
These practices plainly constitute a grave threat to the long-term health and prosperity of the United States economy, he added.
The overall list of Chinese goods subject to tariffs now runs to 194 pages, and now amounts to nearly half of all Chinese imports.