The White House has criticised China after it imposed retaliatory Tariffs against the US on a range of goods including pork and wine. Beijing has introduced duties of up to 25% on 128 American imports following President Donald Trump's decision to slap tariffs on steel and aluminium.
China revealed the move was intended to safeguard its interests and balance losses caused by the new tariffs. US stocks plunged and Asian shares opened lower as trade war fears mount.
On Wall Street, the S&P 500 Index crashed 2.2%, while the Dow Jones Industrial Average dropped 1.9%. In Asia, Japan's Nikkei 225 opened down about 1.5% on Tuesday.
In its statement about the tariffs, the White House accused Beijing of "distorting global markets".
Spokeswoman Lindsay Walters said; "China's subsidisation and continued overcapacity is the root cause of the steel crises. Instead of targeting fairly traded US exports, China needs to stop its unfair trading practices which are harming US national security and distorting global markets."
The back-and-forth reflects rising tensions between the US and China, which President Trump has described as an "economic enemy".
When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!
— Donald J. Trump (@realDonaldTrump) March 2, 2018
The US has taken two major steps recently that have triggered tension with China.
It announced global steel and aluminium tariffs on 8 March saying the measures were necessary to protect US producers and critical to National Security. (Certain allies such as Canada, Mexico and the European Union, are in line for exemptions, pending talks.)
China challenged the US use of national security to justify the tariffs and announced retaliatory tariffs on $3bn (£2.1bn) worth of US products.
Those tariffs went into effect on Monday, targeting US goods including frozen pork, nuts, fresh and dried fruit, ginseng and wine.