The latest US salvo against China threatens to escalate a trade war between the world’s two largest economies. China has vowed to retaliate against the latest punitive duties on its goods.

The United States has announced fresh tariffs on $200 billion (€171 billion) of Chinese goods, spooking markets worried about an escalating tit-for-tat trade war between the world’s largest economies.

The Trump administration said Monday that tariffs would start at 10 percent next week and increase to 25 percent starting January 1.

Washington has already imposed 25 percent duties on $50 billion of Chinese goods over what it alleges are unfair trade practices. With the new tariffs, about half of China’s imports to the United States are covered by punitive trade measures.

‘China will have to take countermeasures’

Beijing has vowed to retaliate on a range of US products valued at around $60 billion.

“If the US 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 ahead of the expected announcement.

China has already imposed retaliatory tariffs on $50 billion worth of US goods in response to Washington’s previous measures. However, because China exports more to the US than it imports there are limits on the amount of tariffs Beijing can impose on American goods. This has raised concerns that China could retaliate with non-tariff trade measures.

In a statement announcing the new round of tariffs, President Donald Trump said if China retaliates the United States “will immediately pursue phase three, which is tariffs on approximately $267 billion of additional imports.”

‘US in a very strong bargaining position’: Trump

Earlier Monday, Trump praised his aggressive trade policy that has also damaged ties with Canada, Mexico, Asian allies and the European Union.

“Tariffs have put the US in a very strong bargaining position, with billions of dollars, and jobs, flowing into our country — and yet cost increases have thus far been almost unnoticeable,” Trump said on Twitter.

US industries have generally opposed tariffs, arguing they increase prices for consumers and could hurt economic growth.

Officials from the US and China have met several times to address trade issues, most recently in August, but were unable to make much progress.

cw/cmk (AFP, AP, Reuters)