'Not in a trade war with China' says Trump

Stocks dive then recover somewhat as U.S.-China trade war escalates

"The overall effect on the U.S. economy should be limited", analysts at Wells Fargo said on 5 April, in consideration of the latest round of tariffs announced by China.

President Donald Trump is scaring the agricultural and manufacturing sectors of the economy as the United States and China outline detailed plans for sweeping tariffs.

In the brewing trade-war between the United States and China, the list of losers already outweighs the winners. The president says he has decided on tariffs of 25% for foreign-made steel and 10% for aluminum, making no exceptions for close allies such as Canada, Britain or Germany.

China responded last month with retaliatory tariffs worth $3bn of its own against the United States on a range of goods, including pork and wine.

That came after the Trump administration unveiled its own tariffs on 1,300 Chinese products, including aircraft parts, medical devices, and flat-screen TVs.

The trade tensions brewing between the world's two largest economies hit global markets, with shares of industrial companies with exposure to Chinese markets, such as Boeing Co and Deere & Co, among the hardest hit.

Though candidate Trump talked a lot about tariffs, his recent announcements had a larger objective than simply fulfilling promises. "This $50 billion that they're talking about amounts to about three-tenths of a percent of our GDP", Wilbur Ross told CNBC. The Chinese lashed back, with planned tariffs on products imported from the US. For example, by imposing tariffs on soybeans, they were targeting the residents of Iowa, which tend to lean Republican. Since China has long resisted any softening of these positions, it is also understandable why the White House sought a way to shock Beijing, but it does not make it any less risky.

At the end of the trading session on Friday, the Dow Jones benchmark, a 30-stock index used as an indicator of market performance, was down 572 points, a drop of 2.3 percent.

We're not there yet, but it must surely occur to senior Chinese apparatchiks as they continue to build up economic and cultural power that in terms of trade trust is the greatest commodity of all.

Chinese state media slammed Mr Trump's threat of more trade action against China as "ridiculous".

Senator Chuck Grassley said China had ignored the rules of the World Trade Organization (WTO) for too long and aggressively pursued practices that unfairly undermine American ownership, innovation and entrepreneurship.

Washington has called for the $50 billion in extra duties after it said a probe determined Chinese government policies are created to transfer US intellectual property to Chinese companies and allow them to seize leadership in key high-technology industries of the future. They are also able to potentially target products that are highly sensitive to the American people.

Trump issues a temporary reprieve on tariffs on steel and aluminum imported from European Union member states, South Korea and other USA allies, taking away some of the foreign and domestic pressure on him to reverse his plans.

All the talk of a possible trade war between China and the United States could go nowhere - both sides could back away from this game of chicken. "The marketplace is already highly competitive, and a trade war will only further complicate things". "The administration knew that if it imposed tariffs on Chinese goods, China would retaliate against US agriculture", Grassley said.