China's exports soared in July, showing little impact from USA tariffs, as Washington finalises more duties on Chinese imports. Since then, Washington and Beijing have raised the stakes by threatening more punitive trade measures in an intensifying dispute that has rattled financial markets anxious about the impact on investment and growth.
After a strong start to the year, growth in the world's second-largest economy cooled slightly in the second quarter, partly hit by the government's years-long efforts to tackle debt risks.
On Tuesday, the Trump administration said it would begin collecting previously announced 25% tariffs on an additional $16bn of Chinese goods from 23 August. In April, the administration had announced plans to slap tariffs on 1,333 Chinese product lines worth $50 billion a year.
The tariffs are aimed at industrial, rather than consumer, imports.
China fired back warning it would impose duties on $60 billion in United States goods.
The government has responded by releasing more liquidity into the banking system, encouraging lending and promising a more "active" fiscal policy.
China in turn retaliated by proposing tariffs on $60 billion worth of USA goods, with the extra levies ranging from 5 to 25 percent.
Chinese state media, reflecting the government's stance, has said China will not be cowed in the face of USA threats.
In the meantime, it sought public comment on the new items.
"Although this may for a moment bring preening with delight, it will make it hard to resolve economic imbalances or out of kilter politics and other deep-rooted problems", it said.
Americans import far more from China than the other way around, however, meaning Beijing may at some point need to look for other means of retaliation.
China has now either imposed or proposed tariffs on $110 billion of US goods, representing the vast majority of China's annual imports of American products.
Explaining the decision, the USTR cited an "exhaustive" investigation that found China using joint venture requirements, investment restrictions and licensing procedures to pressure United States companies into technology transfers.
The latest $16 billion list from the United States will hit semiconductors from China, even though numerous basic chips in these products originate from the United States, Taiwan or South Korea. The retaliatory tariffs hit USA industries in areas of the US where President Trump has received significant support.