Escalating political rhetoric on trade "will continue to be market negative at least for the next few days as the two countries continue to bare teeth, both for the benefit of domestic audiences and to convince each other of their seriousness and resolve", writes Terry Haines, analyst at Evercore ISI.
The intellectual property sanctions were the latest in a spate of protectionist measures unveiled by Trump in recent months that included tariffs on steel and aluminium imports to the USA and a tough rhetoric on trade negotiations from North America to Asia.
Trump insists that China has been unfairly benefiting from a trade imbalance with the U.S. for years.
In an editorial, the English language China Daily, often used by Beijing to get its message out to the rest of the world, said the United States had failed to honor an agreement on rebalancing trade, referencing a deal stuck in May for China to significantly increase purchases of USA goods and services. The tariffs were quickly matched by China on USA exports, a move that drew the president's ire.
He threatened to impose tariffs on an additional $200 billion worth of Chinese goods if Beijing follows through with its promise to retaliate against a previous round of United States tariffs. The US measures would go ahead "if China refuses to change its practices, and also if it insists on going forward with the new tariffs it has recently announced".
Freeland said Canada was working on a response that was "firm, clear and resolute" like its response to the steel and aluminum tariffs.
Canada imposes such onerous tariffs on USA products - shoes, for instance - that people are forced to "scuff 'em up" in order to "smuggle" them home, the president said, seemingly confusing tariffs with duties.
For months, the USA and China have been sparring over tariffs on goods exported from China to the US and vice versa.
The new move, which sent stock markets down yesterday, follows through on the threat by Trump to pursue "additional tariffs" if China engaged in retaliatory actions directed against American exporters or American companies operating in China. Weaker Chinese growth will have repercussions for big trading partners, such as the United States and Europe, and for global companies who do business there. The Shanghai Composite Index fell 3.8 percent and Hong Kong's Hang Seng lost 2.8 percent.
Neymar hobbles out of Brazil training session after 15 minutes
The federation says Neymar has been in pain since the team's 1-1 draw against Switzerland, when he was consistently fouled. In 1998, Alan Shearer was fouled a whopping 10 times in England's curtain-jerker against Tunisia.
Beijing could also seek to make life hard for big USA companies that rely on the Chinese market for a big chunk of their revenue.
The Dow slid 42.41, or 0.2 percent, to 24,657.80.
China's Commerce Ministry on Tuesday once again condemned the new threat of tariffs on $200 billion of goods, saying it's an "act of extreme pressure and blackmail that deviates from the consensus reached by both parties after many negotiations, and is a disappointment to the global community".
"The on-again off-again possible global trade war is looking to be back on again as the USA and China announced tariffs on each other's imports", said Nick Twidale, Sydney-based analyst at Rakuten Securities Australia.
The Trump administration on June 15 said that it will impose a 25 per cent tariff on $50 billion of Chinese exports.
Case in point: The White House threatened China with another round of punitive tariffs - right before Chinese President Xi Jinping met with North Korean leader Kim Jong-un. USA companies, from Caterpillar to Qualcomm, would likely face obstruction from regulators in China, a market they rely on for an outsize share of sales. In April the Commerce Department blocked ZTE from buying US components for seven years, a move that amounted to a death sentence for the company. Oxford Economics estimates that if Trump imposed the $200 billion in duties and China responded in kind, US growth could slow by 0.3 percentage point next year.
Freeland said Canada's proposed tariffs on American-made goods were strategically chosen to have "minimal impact on Canadians".
And U.S. companies have an increasingly sizable stake in the fast-growing Chinese market. More than 800 exports, about $34 billion worth, will be subject to tariffs starting July 6. The White House is finalizing a list of $16 billion in additional goods it will sanction later.