U.S. President Donald Trump signed a document Thursday setting the stage for an estimated $60 billion in new tariffs on Chinese imports that could quickly lead to a trade war with Beijing.
The U.S. leader targeted China's alleged years-long theft of U.S. intellectual property, imposing new restrictions on Chinese investment in the U.S. that mirror regulations that American companies face when they invest in China.
"We have a tremendous intellectual property theft going on," Trump said.
He said the U.S. wants reciprocal trade and tariff deals with China and other countries.
"If they charge us, we charge them the same thing," Trump said at the White House.
Trump, throughout his 14-month presidency, often has praised Chinese President Xi Jinping and cited his good relationship with him. But Trump also has often complained about the U.S.'s $375 billion annual trade deficit with China as reason enough to impose new restrictions. Trump said that with the increased tariffs he hopes to cut the trade deficit with China by $100 billion annually.
China will retaliate
Ahead of Trump's announcement, China vowed that it would retaliate.
"China will not sit idly to see its legitimate rights damaged and must take all necessary measures to resolutely defend its legitimate rights," the Commerce Ministry in Beijing said in a statement.
The prospect of a trade war between the world's two biggest economies rattled stock markets in the U.S., with the Dow Jones Industrial Average of 30 key stocks falling more than 1.5 percent.
The U.S. trade actions come partly in response to what U.S. officials say is the theft and improper transfer of American technology to Chinese companies.
The Chinese commerce ministry said ahead of the meeting that China opposes unilateral U.S. trade actions and hopes the two countries can find a mutually beneficial solution through dialogue.
U.S. officials spoke to reporters Wednesday about their months-long investigation under Section 301 of the Trade Act of 1974 of Beijing’s trade practices.
China has long been considered by many in the international community to have contravened fundamental principles of global trade, despite joining the World Trade Organization in 2001.
There have been a "number of specific failings by China to live up to its WTO obligations," a U.S. Trade Representative official said in a background briefing for reporters.
WATCH: What is a tariff?
Section 301 trade tool
The last time the Section 301 trade tool was wielded was two decades ago by the administration of President Bill Clinton against Japan to pry open that country’s automotive sector.
China has been "ripping off" the United States, Trump has emphasized numerous times in public remarks during which he has harshly criticized his predecessors for not doing anything about it.
Trump in January hit the Chinese-dominated solar panel and cell industry with tariffs. Earlier this month, he launched global tariffs on steel and aluminum (from which Canada and Mexico were quickly given indefinite exemptions), a move China’s commerce ministry said it "strongly opposed."
Bracing for an anticipated harsh reaction from China against Trump's announcement, one U.S. official said, "We recognize the potential gravity of the situation here."
Depending on the severity of the measures taken by Trump, stock markets in Asia and elsewhere could be roiled, according to market analysts.
Trade groups representing American retail giants, such as Walmart, and tech companies, including Apple, warn that sweeping tariffs would raise prices for consumers in the United States and might not do much to reduce the trade deficit.
Ken Bredemeier contributed to this report