China retaliates as trade war starts and Fed warns of economic hit

China flag and the U.S. Stars and Stripes fly on a lamp post Pennsylvania in Washington

Another $16bn of goods could follow in two weeks, Trump earlier told reporters, before suggesting the final total could eventually reach $550bn, a figure that exceeds all of USA goods imports from China in 2017.

A China central bank adviser said the planned US import tariffs on $50 billion worth of Chinese goods - $34 billion plus a planned follow-on list worth $16 billion - will cut China's economic growth by 0.2 percentage points, although the overall impact would be limited, the official Xinhua news agency reported Friday. He has already threatened to escalate US tariffs to cover almost all the goods the United States imports from China if he does not get his way.

Chinese President Xi Jinping's government has issued a list of USA goods for possible retaliation, but the Commerce Ministry said it will wait to see what Washington does.

FILE PHOTO: The label of a Washington D.C. sweatshirt bears a U.S. flag but says "Made in China" at a souvenir stand in Washington, DC, U.S., January 14, 2011. "However, if the United States adopts taxation measures, China will be forced to fight back to defend the core interests of the nation and the interests of the people".

According to the US Customs and Border Service, the United States on July 6 at 00:01 local time, introduced the first installment of 25% import duties for 818 items of Chinese goods for the total amount of $34 bln.

According to the propaganda instructions: "The trade conflict is really a war against China's rise, to see who has the greater stamina".

It is now the "largest trade war in economic history". The main Chinese stock market index has tumbled 12 per cent over the past month.

But Meyer said that "further escalation", including auto tariffs, would cause Bank of America to "reassess" the outlook for the USA economy. To put it simply, the United States is opening fire on the entire world, including itself, ' Gao said.

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"Millions of American jobs depend on America's ability to trade with other countries", the chamber said in a recent statement.

"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".

"There is a chance the company will lose money and might go bankrupt", said Tong.

USA officials accuse China of building its emerging industrial dominance by stealing the "crown jewels" of American technological know-how through cyber-theft, forced transfers of intellectual property and state-sponsored corporate acquisitions. But rules on auto manufacturing, pharmaceuticals and other industries require companies to operate through state-owned Chinese partners and share know-how with potential competitors or teach them how to develop their own. But none directly addresses the complaints that are fueling its conflict with Washington.

And signs are growing that the escalating global trade dispute is already affecting the world's top economy, with punitive duties now in place for steel and aluminium and the White House threatening to levy duties on auto imports. By delegitimizing such alliances and institutions, all of them created under US auspices in the postwar era to help prevent global economic competition from fueling worldwide conflict, Mr.Trump takes USA foreign policy generally back to the Smoot-Hawley era.

And enduring the pinch isn't going to pay off. Protectionism has historically proven to be destructive for the global economy and won't achieve what the Trump administration is trying to accomplish, said Hsu.

Forecasters say global economic growth could be reduced by up to 0.5 percentage points in 2019-20 if both sides wind up raising tariffs on $250 billion of imports.

AP researcher Yu Bing in Beijing contributed.

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