Deepening a trade battle and sending financial markets into a tailspin, China announced Monday it was raising tariffs on $60bn of US goods after the latest increase in American tariffs on its exports.
The move comes after the United States escalated the bitter trade war with a tariff hike on $200bn of Chinese products on Friday.
China will impose tariffs on a total of 5,140 US products from June 1, the finance ministry said in a statement.
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"China's adjustment on additional tariffs is a response to US unilateralism and protectionism," the ministry said. "China hopes the US will get back to the right track of bilateral trade and economic consultations and meet with China halfway."
The retaliatory measures were announced about an hour after US President Donald Trump tweeted directly to Chinese President Xi Jinping.
"China will never surrender to external pressure," foreign ministry spokesman Geng Shuang said at a regular briefing shortly after.
Markets immediately slumped with the Dow Jones Industrial and the S&P 500 down more than 2 percent. The tech-heavy Nasdaq dropped more than 3 percent.
Technology, industrial and consumer-focused companies beared the brunt of the losses, including Apple down 5.3 percent.
Other US companies with large China operations suffered big declines: Caterpillar down 4.3 percent, Deere & Company down 5.2 percent, General Motors down 3.2 percent, and Starbucks down 2.2 percent.
"With the ultimate trade outcome inherently uncertain and difficult to model or predict, investors are selling first and asking questions later," said Alec Young, managing director of global markets research at FTSE Russell in New York.
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