The Chinese announced tariffs of up to 10 per cent on £46 billion of US goods from Monday in retaliation for President Donald Trump slapping 10 per cent – to rise to 25 per cent by the end of the year – on £152 billion of Chinese products from that date.
The new levies will cover about 5,000 US goods, including aircraft, soya bean oil, beef, coffee and flour.
The world’s two largest economies had already applied tariffs to £38 billion of each other’s goods.
Mr Trump’s move is his latest push against “unfair” trade policies which he says impact on US jobs.
He said: “For months, we have urged China to change these unfair practices and give fair, reciprocal treatment to American companies.
“I urge China’s leaders to take swift action to end their country’s unfair trade practices. Hopefully, this will be resolved, in the end, by myself and President Xi Jinping of China, for whom I have great respect and affection.”
Financial markets reacted calmly to the escalation with US stocks following Chinese shares higher. Meanwhile, a UK-US trade deal could “rewrite the rules” of global commerce, according to a new report.
Experts from 11 think tanks on both sides of the Atlantic contributed to a draft text for an “ideal” free-trade deal that would reduce barriers and eliminate tariffs for nearly all goods.
Matt Kilcoyne, of neoliberal think tank the Adam Smith Institute and co-author of the report, said: “Together the US and the UK have the clout to rewrite the rules of global trade.
“This deal would be about freeing citizens of the two largest English-speaking countries to trade without impediment, to be able to move for work and change their stars.
“Britain’s future is bright, so long as it doesn’t just buy into the status quo or join in trade wars against her own citizens. Instead, the UK must seek to bring down barriers and push up prosperity.”
Another co-author Tom Clougherty, from the Centre for Policy Studies, said: “This isn’t just an ideal free trade agreement between Britain and the United States. It is a model for how trade liberalisation can and should work in the 21st century.”