China confirmed it will impose 25 percent tariffs on an additional $16 billion worth of imports from the U.S. beginning Aug. 23, matching Tuesday’s move from Washington and adding an additional complication for carmakers facing a trade war.

The decision follows a move Tuesday by the U.S. to levy 25 percent tariffs on the same value of Chinese goods that China’s Ministry of Commerce said is “very unreasonable.” China said it will have to retaliate to protect its rightful interests and the multilateral trading system.

The tit-for-tat protectionist measures are poised to surge even higher, with the U.S. reviewing 10 percent duties on a further $200 billion in Chinese imports that it may even raise to 25 percent after a comment period ends on Sept. 6. Should the U.S. proceed with those tariffs, China’s ready to slap duties on an additional $60 billion of American goods.

“We’re not yet past the point of no return but we’re edging closer to it,” said Wang Tao, head of China economic research at UBS AG in Hong Kong. “The risk is that the U.S. administration’s gamble to strong-arm China into giving into all U.S. demands without some compromise only leads to successive rounds of higher and higher tariffs.”

President Donald Trump has suggested he may tax effectively all imports of Chinese goods, which reached more than $500 billion last year. Reserve Bank of Australia Governor Philip Lowe Wednesday warned that escalation of the dispute could be “very damaging for the world economy.”

China’s exports grew faster than expected in July, while imports surged, showing both domestic and international demand continue for now to shrug off the uncertainty of the trade conflict with the U.S. The world’s largest exporter, China is still benefiting from robust global demand even as increasing tensions and rising trade barriers with the U.S. weigh on the outlook.

American automobiles are on the list of goods that would be hit with tariffs. China is the world’s largest automobile market with more than 25 million in car sales last year, compared with 17.23 million in the United States. China is expected to be a force in the auto industry for years to come, especially in electric cars. In 2017, China sold 777,000 electric cars and plug-in hybrids, compared with about 200,000 in the United States.

Charlie Chesbrough, senior economist and senior director of industry insights for Cox Automotive, said the budding trade war between the U.S. and China is causing difficulties for both U.S. and foreign-owned auto companies.

“It hard for an industry which has a very long lead time,” he said. “Tariffs make it very difficult to do any sort of stragetic planning.”

The revised Chinese list released Wednesday added hundreds of new items to be hit with tariffs, and now covers items as diverse as coal, medical instruments, waste products, cars and buses. The tariffs will come into effect simultaneously with the U.S. ones.

The U.S. announced Tuesday that its own tariffs on $16 billion of Chinese goods would start on Aug. 23. U.S Customs will begin collecting duties on 279 product lines ranging from motorcycles to steam turbines and railway cars, the U.S. Trade Representative’s Office said in an emailed statement Tuesday.

The U.S. had already levied 25 percent duties on $34 billion in Chinese goods on July 6, prompting swift in-kind retaliation from Beijing. At the weekend, Trump said he had the upper hand in the trade war, while Beijing responded through state media by saying it was ready to endure the economic fallout.

Chesbrough said some luxury car makers like BMW were previously planning to make cars in the U.S and export them into China. He said Ford Motor Co. had also considered building small cars in China and exporting them to other markets.

Chesbrough said businesses have been clamoring for the Trump administration to tackle intellectual property violations among Chinese companies, but he said the tariffs that have been imposed thus far by Trump are missing the mark on those problems.

“There are a number of folks who agree with the president that there is a problem with trade and China,” he said. “We are running a deficit there. But most people are cornenced with technology. I don’t know if any of the tariffs that have been announced so far address the technology transfer that’s taking place.”

A U.S.-China trade war will reduce global output by 0.7 percent by 2020, with China’s economy taking a 1.3 percent hit and U.S. GDP dropping 1 percent, Oxford Economics said in a research note Tuesday, before the new list was released. While there’s no major risk of the world lapsing into “damaging stagflation,” the possibility remains of a “bigger blow-up” that sharply reduces trade, as in the 1930s, it said.

Detroit News staff writer Keith Laing contributed to this report.

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