China is set to impose a tariff of up to 10% on $75bn of goods imported from the US as the trade battle between the two superpowers escalates.
Agricultural goods, crude oil and small aircraft are among the products being targeted.
The tariff is a retaliation after President Trump revealed plans for a 10% tax on $300bn of goods from China.
The new tariffs will range between 5% and 10% and will apply to more than 5,000 goods coming from the US.
Beijing will also revive a 25% tariff on US car imports that it lifted earlier in 2019 in a goodwill gesture as the two countries tried to negotiate a trade agreement.
The decision – announced shortly before Federal Reserve chairman Jerome Powell gives a closely-watched speech – hit share prices in the US and Europe.
Tariffs ‘well signalled’
On 1 August, President Trump unveiled a 10% tariff on $300bn of Chinese goods, blaming China for not following through on promises to buy more American agricultural products.
That tariff was expected to be introduced on 1 September, but less than two weeks later Mr Trump delayed that date to 15 December, partly due to concerns it might hit Christmas shoppers.
China said it planned to impose its new tariffs in two stages on 1 September and 15 December.
The US has sought to play down news of the new taxes.
President Trump’s trade adviser, Peter Navarro, told CNN that the Chinese tariffs were “well signalled,” adding: “This isn’t breaking news.”
He said that talks between the two countries were on schedule and argued that the tariffs were not hurting Americans.
“Consumers aren’t feeling the pain [of the trade war] and we are focused on making sure they [China] feel the pain not us.”
He added that the economic slowdown was the fault of the Federal Reserve, which has drawn criticism from Mr Trump for not making bigger cuts in interest rates.
Mr Navarro said the bank should lower the benchmark interest rate further to stimulate growth.
News of the new tariffs broke shortly before Fed chair Mr Powell was expected to give a much-anticipated speech at a gathering of central bankers in Jackson Hole, Wyoming.
Investors will be watching for hints of whether the Federal Reserve is planning further interest cuts against a complex economic backdrop in the US.
Bond markets have sent warning signals of an impending recession. However, equities are trading at near record highs and employment is at its highest level in almost 50 years.
Mr Trump took to Twitter on Friday morning to claim that the economy was “strong and good”, adding that “the rest of the world is not doing so well”.
But markets in the US fell after opening.
Markets had been expecting China to react to the taxes announced by Mr Trump earlier in August, as China’s foreign ministry had warned that Beijing would retaliate.