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Update: China strikes back with tariffs on $34B of US goods

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Update: China strikes back with tariffs on $34B of US goods

China imposed additional tariffs on about $34 billion of U.S. goods on July 6 in retaliation to U.S. tariffs on equivalent value of Chinese goods that took effect earlier in the day, igniting fears of a full-blown trade war.

The official Xinhua news agency said China's retaliatory tariffs took effect at 12:01 p.m. in Beijing on July 6. Foreign Ministry spokesman Lu Kang confirmed at a press conference that tariffs were in effect, Bloomberg News reported.

China promised not to fire "the first shot, but ... we have been forced to take the necessary counter measures," the Ministry of Commerce spokesperson said. "We will promptly inform the [World Trade Organization] about the situation and work with countries around the world to jointly safeguard free trade and the multilateral system."

The Chinese Customs Tariff Commission said additional tariffs would target 545 items including U.S. agricultural products, vehicles and aquatic products, in what was billed as the first "tangible action" from China in the ongoing trade tensions between the world's two largest economies.

The Ministry of Commerce said the U.S. move has sparked the "largest trade war in economic history" that would hurt global growth.

Meanwhile, China pledged to deepen reforms, further open up its economy, and bolster property rights protection to improve business conditions for foreign companies, the ministry said. "We will continue to assess the impact of tariffs on companies and take effective measures to help them."

"[The U.S.-China tit-for-tat tariffs] will apply the brakes to a global economy that has less durable momentum than appears to be the case," Robert Carnell, chief economist, head of research, Asia-Pacific at ING.

"The economic damage from tariffs could be costly to both nations, and beyond. There is also a risk that this could escalate into a full-blown trade war," said Fawad Razaqzada, market analyst at Forex.com.

China Daily, the country's state-run English language newspaper, initially reported that the country had already imposed retaliatory tariffs, but later changed the report to indicate that the Chinese government will respond to U.S. tariffs. The newspaper did not offer any explanation for the change.

U.S. President Donald Trump threatened to extend tariffs to more than $500 billion of Chinese goods if Beijing retaliates.

The U.S. dollar was up 0.25% against the yuan as of 3:26 a.m. ET.

As of July 5, US$1 was equivalent to 6.64 Chinese yuan.