Geneva/Mumbai: Stock markets in India and across the world tumbled by as much as 2% on Wednesday after China said it will slap fresh retaliatory tariffs on more than 100 US products, including the politically sensitive soybeans, sparking fears that an escalating trade war between the world’s largest economies could swamp some of its fastest growing ones.

The benchmark indices Sensex and Nifty lost more than 1% as investors feared that a full-fledged trade war would spread to more goods and more nations and will dent global growth.

BSE’s 30-share Sensex closed at 33,019.07, down 351.56 points or 1.05% while the National Stock Exchange’s 50-share Nifty closed at 10,128.40, down 116.60 points or 1.14%.

Market reactions in Asia were mixed, with Hong Kong and South Korea slipping 1-2%, while European markets were also under pressure.

In a sharp response to the escalating tit-for-tat that started with US President Donald Trump hiking steel and aluminium tariffs on 23 March, Beijing said on Wednesday that its retaliatory actions will be proportional and balanced as per World Trade Organization (WTO) rules.

According to a news item broadcast on state-owned China Central Television, “China’s tariff commission of the State Council has decided to impose an additional tariff of 25% on 14 categories of 106 products such as soybeans, automobiles and chemical products originating in the United States."

Beijing said the date for imposing additional tariffs on American products will be “determined" by the implementation of the US government’s additional tariffs on Chinese products such as electric cars, jet engines, nuclear reactor parts and vaccines that the Trump administration announced on Tuesday.

The Chinese finance ministry said, “America’s measures [for imposing additional tariffs on a range of Chinese hi-tech products] have violated the rules of the World Trade Organization, and have seriously violated China’s legal rights."

China said the additional tariffs to be imposed by the country on US goods will be “in line with our rights and commitments under the WTO" and its domestic law.

About 40% of China’s soybean imports come from the US and are valued at $14 billion, news agency Associated Press cited the Iowa Soybean Association as saying. Iowa, a Republican-controlled state, is a leading producer.

On Tuesday, US trade representative Robert Lighthizer announced the list of Chinese goods that will be subject to additional tariffs, citing China’s unfair trade practices, including rules for forced technology transfer by firms setting up in China, and its alleged violation of intellectual property rights.

The US disclosed a long list of some 1,300 tariff lines that were scheduled to be published in the Federal Register on Wednesday. The US trade representative said its actions are based on Section 301 investigations that were carried out earlier in the year. “These policies [such as forced technology transfer by the foreign companies] bolster China’s stated intention of seizing economic leadership in advanced technology as set forth in its industrial plans, such as Made in China 2025," Lighthizer said.

The Trump administration has said it will impose $50 billion of tariffs to address its $350 billion trade deficit with China.

According to a report in Washington Trade Daily on Wednesday, Chinese sectors subject to the proposed tariffs include industries such as aerospace, information and communication technology, robotics and machinery."

“The list covers approximately 1,300 separate tariff lines and will undergo further review in a public notice and comment process, including a hearing set for 15 May," it said.

On 30 March, the US invoked dispute settlement proceedings against China at the WTO, saying Chinese policies for mandatory technology transfer by foreign companies to Chinese entities violate global trade rules.

China’s envoy to the WTO, Zhang Xiangchen, warned on 26 March that “unilateral action of the US Section 301 investigations will not only impair the rights and interests of China and other WTO Members, but also seriously undermine the multilateral trading system".

“WTO members should jointly prevent the resurrection of 301 investigations and lock this beast back into the cage of the WTO rules," Zhang said.

“If someone asks what the character of the Chinese people is, I’d say that it is like a bamboo, resilient enough to dance in the wind, but strong enough to withstand tremendous pressure... The WTO is under siege and all of us should lock arms to defend it," he added.

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