Trump, who announced the United States starting to collect tariffs on $34 billion worth Chinese goods after midnight Thursday, warned that subsequent rounds could see tariffs on more than $500 billion of goods, or roughly the total amount that the USA imported from China past year. It also is rooted in the clash between American notions of free trade and Beijing's state-led development model.
In the first round though, the additional Chinese duties on US goods will have a significant impact on some items, risking lower sales.
Last midnight saw the first wave of tariffs take effect. "To put it simply, the USA is opening fire on the entire world, including itself", China's Commerce Ministry spokesperson Gao Feng said in Beijing.
United States tariffs on $34bn in Chinese imports took effect as a deadline passed on Friday, and with Beijing having vowed to respond immediately in kind, the world's two biggest economies took a high-stakes turn towards all-out trade conflict.
But that step raises costs for U.S. companies that rely on Chinese-made machinery or components.
Most-active soybean futures are trading near a two-year low on the Chicago Board of Trade and the cheap price is attracting other buyers.
Because of this first round of hostilities, American businesses and, ultimately, consumers could end up paying more for such Chinese-made products as construction equipment and other machinery.
The company said it had already moved some production to the United States and Mexico and would likely move more.
For instance, China's 25% retaliatory duty on whiskey could harm the USA producers, according to the Distilled Spirits Council. But the thing is some say the trade war started this morning, and in a war, it's not always calm or controllable or rational.
Trump's one-on-one talks with Putin to include election meddling, ambassador says
Trump's political opponents in the USA will be looking for any sign that the president goes easy on Mr. The decision comes less than two weeks ahead of a planned summit between U.S.
In addition to Friday's tariffs and in response to China's retaliation in June, Mr Trump has ordered tariffs on $200bn worth of imports and threatened tariffs on another $200bn.
After that, the hostilities could intensify: Trump said the U.S. is ready to target an additional US$200 billion of Chinese imports - and then US$300 billion more - if Beijing does not yield to USA demands and continues to retaliate.
The Trump administration contends China has deployed predatory tactics in a push to overtake USA technological dominance.
Kent Bacus, who heads trade for the National Cattlemen's Beef Association, said, "We're hopeful that the administration is going to be successful, but we need them to be successful very soon".
But China also believes that its economy, with a greater focus on domestic demand and a reduced dependence on exports, can ride out the storm. Gold flows would be the balancing mechanism through which accounts between countries are settled.
He cited "scaled-up health, safety and tax checks, delaying the import of goods and boycotts of U.S. goods".
Washington has strained relations with potential allies in its dispute with Beijing by raising import duties on steel, aluminum and autos from Europe, Canada, Mexico and Japan. Some analysts such as Singapore-based DBS say the USA economy could suffer more than China's, as USA levies could affect American firms with investments in the country and Washington is also involved in other trade conflicts.
It is unclear how long the trade war will last.
"But the tariffs will bring double-lose results".
"It creates a lot of uncertainty for everybody", said Gary Atkinson, chief executive officer of Fort Lauderdale, Fla. -based Singing Machine Co., which sources 100 percent of its karaoke machines and other gear from China.
German autos BMW (BMWG.DE), Daimler (DAIGn.DE), Porsche PSHG_P.DE and Volkswagen (VOWG_p.DE) were among the biggest STOXX risers, up as much as 4.7 percent following a report about a USA offer to suspend threats to impose tariffs on cars imported from the European Union.