The U.S. action that prompted the Chinese retaliation was the latest by President Donald Trump to put pressure on China to negotiate trade concessions, after Washington imposed tariffs on $34 billion in goods last month.
The Asian economic powerhouse will add the tariffs on USA imports to measure the same tax placed on their exports, CNBC said. But it was 11 percent higher than in the same month past year. 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.
USA president Donald Trump has threatened to target all $500bn of Chinese imports.
All in all, China's trade surplus with the U.S. shrank to $28.08 billion in July against $28.97 billion in the previous month.
Still, disagreements between the two major economic powers run deeper than just the trade balance and tensions remain over market access, intellectual property, technology transfer and investment. "The risk is that the USA administration's gamble to strong-arm China into giving into all United States demands without some compromise only leads to successive rounds of higher and higher tariffs".
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While trade tensions are being ratcheting up, China's trade surplus with the USA stood at US$28.1 billion in July, close to the record-high in June, data released Wednesday showed.
USTR said there were 279 new goods to be targeted in the latest round of tariffs.
Analysts from Oxford Economics have predicted that China's GDP growth may slow to 6.4 per cent this year, from 6.9 per cent in 2017, as the effects of the trade war weigh.
It will be the second time the United States slaps duties on Chinese goods in about the past month, despite complaints by American companies that such moves will raise business costs and eventually consumer prices.
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.
"We have made the case to the administration, in the strongest possible terms, that tariffs imposed on semiconductors imported from China will hurt America's chipmakers, not China's, and will do nothing to stop China's problematic and discriminatory trade practices", SIA President John Neuffer said in a statement.