FILE PHOTO: China's President Xi Jinping and U.S. President Donald Trump witness U.S. and Chinese business leaders signing trade deals at the Great Hall of the People in Beijing, China November 9, 2017.
The prospect of a full-blown trade war between the world's two biggest economies rattled investors Thursday, sending stocks to their biggest loss in six weeks.
China's Foreign Ministry spokesman Lu Kang told reporters recently: "We have said many times, there are no winners in a trade war".
The Chinese government's primary target is the so-called "farm belt" comprised of several red states in the Midwest and Western U.S.
Investors anxious that if the dispute escalated, China will counterpunch with restrictions of its own, hurting American exports of airplanes, construction equipment and other goods.
While China has stepped up its rhetoric, it is far from clear that Beijing is ready to take the next step and move to an economic confrontation that would pit the world's two leading economic powers against each other.
Chinese officials reportedly seek to hurt US industries that employ a large proportion of Republican voters in hopes to take down President Trump. It called for a negotiated settlement to the dispute.
"This [tariffs on US pork] will have a big impact on our import trade but our company also does domestic pork so overall the impact is not so bad", said an import manager at Beijing Changxinchang Food Products Co Ltd. A trade war could disrupt the back-and-forth flow of parts, forcing factories to slow or halt production.More news: Wall St set to open flat amid trade war fears
More news: AAP govt unveils 'green budget' in bid to improve Delhi's air quality
More news: Musk set for $50bn pay package at Tesla
China has already identified agriculture as a USA weak point and has said it would target soybeans, a $14 billion-a- year business. Aerospace company Boeing slid 5.2 percent.
Even so, overall Chinese pork imports are set to fall by as much as 30 percent this year because of the decline in domestic hog prices, said Feng Yonghui, chief researcher with industry website Soozhu.com.
Caterpillar gets about 5 percent of its revenue from China, Boeing 12 percent and Micron almost 50 percent, according to the research firm FactSet. The S&P 500 decreased 55.43 points, or 2.10 percent, to 2,588.26.
"We have the good faith to do it this way, however, history shows trade wars are in nobody's interests, but China is willing to protect its legitimate rights if something happens we don't want to see".
U.S. President Donald Trump waves to the crowd before delivering remarks at the National Republican Congressional Committee's annual March dinner at the National Building Museum in Washington, U.S., March 20, 2018. While the tariffs are not final, Ewoldt is planning for what could be to come.
However, the following year Canada surpassed China as top destination for US farming exports, bringing in over $20 billion worth of products. Trump put the figure at $60 billion, causing some confusion over the actual extent of the sanctions.
Lighthizer told the House of Representatives Ways and Means Committee, a top economic panel, that the aim would be to minimize the impact of any tariffs on USA consumers.
"This is throwing down the gauntlet to the Chinese", Scott Kennedy, a China specialist at the Center for Strategic and International Studies. "We really don't know where this is going to go".