Trump has been considering tariffs against China since his officials concluded in March that Beijing violates US intellectual-property rights, such as by forcing American firms to hand over technology. It's unclear what that action could include.
The Office of the US Trade Representative proposed 10 per cent tariffs Tuesday on a list of 6031 Chinese product lines. That came four days after Washington added 25 per cent duties on US$34 billion worth of Chinese goods and Beijing responded by increasing taxes on the same amount of American imports.
As its dispute with Washington deepened, Beijing has been calling on other countries to support global free trade and has talked up efforts to ease investment rules.
China, which imports 60 per cent of the soybeans traded worldwide, bought 32.9 million tonnes from the United States past year, accounting for 34 per cent of the total purchases. In late morning trading, all major European indices are also nursing losses of more than 1%.
Farmer Terry Davidson walks through his soy fields July 6, 2018, in Harvard, Illinois, the same day China imposed retaliatory tariffs aimed at the United States soybean market.
All told, Trump has threatened eventually to slap tariffs on up to $550 billion in Chinese imports - more than China actually exported to the United States past year - if Beijing won't relent to USA pressure and continues to retaliate. "The US upped the stakes in the trade war with China, sending equity markets tumbling, as risk off prevails", Jasper Lawler, head of research at London Capital Group wrote in an email.
China has seven weeks to make a deal or dig in and try to outlast the US leader.
"Trump's escalation of trade hostilities makes it increasingly hard to envision an exit path from an all-out trade war".
However, in a statement this morning the Chinese ministry of commerce hit back, saying: "China is shocked by U.S. behaviour".
The International Monetary Fund has warned that a full-blown trade war could undermine the broadest global upswing in years.
As a leading grain trader in these regions, Cofco could help to meet domestic demand, he said.
The US administration late on Tuesday released a huge list of new tariffs on $US200 billion worth of goods from China.
"Tonight's announcement appears reckless and is not a targeted approach", said Senate Finance Chair Orrin Hatch in a statement.
The Trump administration said the new levies are a response to China's decision to retaliate against the first round of USA tariffs. That would leave China only $80 billion for further retaliation.