"We've generally seen freer and freer trade since World War II, and now we seem to be reversing that", David Dollar, senior fellow at the Brookings Institution in Washington and a former U.S. Treasury attache in Beijing, said in a Bloomberg Television interview on Thursday.
From July 6, the U.S. government will levy tariffs of 25 percent on 818 different Chinese product lines, valued at around $34 billion (€29 billion) worth of imports.
"Put simply, the USA is opening fire on the world - and itself", Chinese Ministry of Commerce spokesperson Gao Feng said on Thursday. As an example, Chinese companies are reselling USA soybeans, and Chinese companies are expected to cancel most of the remaining soybeans they have committed to buy from the United States in the year ending August 31, once the extra tariffs take effect.
China is expected to retaliate as soon as the USA tariffs go into effect, imposing duties on goods worth roughly the same amount but with a greater emphasis on politically sensitive agricultural products.
"U.S. measures are essentially attacking global supply and value chains". A Chinese government spokesman has said Thursday, July 5, 2018, that Beijing "will not bow in the face of threats and blackmail" on the eve of US tariff hikes and will defend its interests.
A model by economists at Pictet Asset Management in London reckons a 10 percent tariff on USA trade fully passed on to the consumer could tip the global economy into a state of stagflation and knock 2 and a half percent off corporate earnings.
"China will not bow in the face of threats and blackmail", he added.
Customs services for the USA and China will be responsible for collecting the new tariffs as imports pass through the port of entry.
For instance, Trump announced that the U.S. would expand the use of the Committee on Foreign Investment in the United States, which could limit Chinese investment in USA companies.
The trade dispute has roiled the stock market, where the benchmark Shanghai Composite index has tumbled 12 per cent in the past two weeks.
"There's nothing we can do if there's a trade war", Gao said as he showed off the firm's imported lobsters amid tanks of seafood at its Beijing store.
The WTO issued the warning just before new US tariffs on $34 billion of Chinese imports go into effect at midnight Thursday.
A US industry source said: "There is a 99 percent chance that tariffs go into force on Friday". "Security personnel have detained and/or deported US citizens for sending private electronic messages critical of the Chinese government".
"Washington can not contain China's growth through a trade war", read the headline of an editorial Thursday in the Global Times, a party newspaper.
And Gao noted that of the $34 billion in taxable products on the USA list, about $20 billion - or almost two thirds - are made by firms with foreign investment, including a "significant portion" from America. Beijing is targeting soybeans, corn, wheat, rice, sorghum, beef, pork, poultry, fish, dairy products, nuts and vegetables, and autos in its first round of counter measures.
In fighting back, China could impose onerous regulatory and bureaucratic hurdles on USA companies' Chinese operations.
Economists are generally wary of tariffs, since they drive up costs for businesses and consumers.
"I'm afraid not, for now", said Tu Xinquan, a trade expert at Beijing's University of International Business and Economics, who has advised the Chinese government.