China on Monday struck back at US tariffs on Chinese goods, announcing duties of between 5 percent to 25 percent on more than 5,100 products from the US worth tens of billions of dollars.
The measured but firm response from Chinese officials highlighted China's defiance toward maximum pressure from US officials amid a fresh escalation in the trade war, while also seeking to avoid a full-fledged trade war with the US, analysts said.
China will impose an additional tariff of 25 percent on 2,493 items such as liquefied natural gas and 20 percent on 1,078 items, including fruits and chemicals, starting June 1, the Customs Tariff Commission under the State Council, China's cabinet, said in a statement Monday night.
China will also impose an additional tariff of 10 percent on 974 items, such as vegetables and seafood, and 5 percent on 595 items, including smaller planes, according to the statement. In total, the tariffs cover 5,140 US products worth $60 billion.
The statement said that China's measures were in response to the US' decision to raise tariffs on $200 billion in Chinese goods.
"The aforementioned US action has led to an escalation in China-US trade frictions and is against a consensus reached by the two sides to address trade differences through consultations," it said, adding it hurts both sides' interests.
Following China's tariffs, US stocks tumbled on Monday, with the Dow Jones Industrial Average losing 2.17 percent shortly after market opening. Shares of major US companies which rely on Chinese markets also nosedived, with machinery maker Caterpillar stocks down 4.54 percent and aircraftmaker Boeing shares down 3.38 percent.
"I think the response is firm but measured," said Huo Jianguo, vice chairman of the China Society for World Trade Organization Studies in Beijing, pointing out that the measures were specifically aimed at responding to the US action.
The US on Friday raised duties on $200 billion in Chinese goods to 25 percent from the 10 percent imposed since September 2018, to which China responded with tariffs on $60 billion in US goods.
"While the Chinese tariffs cover less US products than the US tariffs do on Chinese goods, it is sufficient to show that China is not going to back down from pressure," Huo said.
China's response comes about an hour after US President Donald Trump warned China against retaliating on Monday. "China should not retaliate - will only get worse!" Trump tweeted, while repeating false accusations against China.
The Chinese tariffs also followed fresh threats from US officials to impose tariffs on $325 billion in Chinese goods with details expected to be announced on Monday US time.
"Since the US has resumed the trade war, we should hit back hard… to show the Americans that they will not gain anything from their tough approach," He Weiwen, a former senior Chinese trade official, told the Global Times. "But we should also not close the door to talks."
Though China was forced to impose the tariffs, it also did so in a way that avoided a further escalation and left room for negotiations, said Song Guoyou, director of Fudan University's Center for Economic Diplomacy.
"The country still left some room in the hope that bilateral trade tensions would not further escalate, and that there would be possible future talks with the US," Song said.
Chinese and US officials concluded the 11th round of negotiations in Washington on Friday without reaching any deal. There were no plans for future talks as of press time on Monday.
But in light of the drastic turn of events in the trade talks, China has prepared for all scenarios, officials and analysts said.
"The Chinese side will never succumb to external pressure and we have the resolve and ability to safeguard our legitimate rights and interests," Geng Shuang, a spokesperson for the Chinese Foreign Ministry, told a routine press briefing on Monday.
"Again, we hope the US side could work with China and meet China halfway to address each other's reasonable concerns based on mutual respect and equal terms," he said.
But if the US wants to further escalate the trade war, China will respond in kind and there are many other tools it could take to inflict pain on the US economy, including targeting US financial markets, analyst noted.
However, while fighting back is necessary, it is also equally important for China not to lose focus in carrying out stated reform and opening-up efforts aimed at ensuring long-term growth for the Chinese economy, analysts said.
"We need to commit to our policies because we must keep things at home in good shape. That goes without saying," Huo said, noting that China should continue its reform and opening-up efforts.
Continuing reform and opening-up measures will not only help cope with pressure from the US, but could also ensure long-term growth for the Chinese economy, analysts said.
In the short term, though, China needs to properly evaluate the potential damage of the trade war on Chinese companies and workers and take necessary measures to help them weather the impact.
Yu Yongding, a senior research fellow at the Chinese Academy of Social Sciences, said that given China's deep role in the global value chain, it is hard to evaluate the impact on the Chinese economy, but China needs to prepare for the worst.
"In any case, the Chinese economy will be able to withstand the impact, and China's monetary and fiscal policies still have room," he said at a seminar in Beijing on Saturday.