China has said it will have to take what it called necessary counter-measures after the U.S announced plans for more tariffs on imports. The Asian giant says it's shocked and that the proposals will harm the world.
It's been just a few days since the two countries imposed tit-for-tat tariffs of 29 billion euros. The U.S. has now listed another 170 bn euros ($200bn) worth of tariffs on more products that are due to go into force in September.
One problem for Beijing is that it imports far less from the U.S. than it exports - much to the annoyance of Donald Trump - and that gives it less scope to retaliate - they may run out of American goods to penalise.
Last year, for example, China imported almost four times fewer goods to the U.S. than what it exported to America.
But running out of goods doesn't mean running out of options. Beijing could target American companies like Apple. If China bans Apple - which it has not threatened to do - the company would lose 33 billion euros, which is around 19 percent of its revenue, as well as access to the world's largest consumer market.
The Cupertino giant could see its 778 billion euro market capitalisation melt away, potentially threatening jobs.
China also has massive financial leverage in that it is America's biggest foreign creditor.
The total U.S. debt is over 18 trillion euros. A third of it is in hands of foreign investors with China's part amounting to one trillion euros.
Should China choose to sell enough of that debt in the form of bonds, it could drive up the cost of borrowing in the U.S. and cause havoc on world markets.