"If the U.S. side becomes irrational and issues the list, China will have to adopt measures that are comprehensive measures in quantity and quality in order to make strong countermeasures".
It gave no details.
In an interview on Monday, Bart Oosterveld, director of the global business and economics program for the Atlantic Council, a Washington, D.C. -based think tank for worldwide affairs, correctly predicted that the trade spat between the Trump administration and China had at least one or two more rounds in it.
Trump announced in May he was abandoning the 2015 nuclear deal with Iran - which will mean new sanctions on the Islamic republic and punitive measures for those who trade with it. Hong Kong's Hang Seng Index finished down 2.76 percent. "We do our best to call out unfair economic behaviors as well".
"Aircraft, chips and energy imported from the U.S. could be subject to [punitive tariffs]" he said.
Until now, China has mirrored Trump's actions, matching Friday's tariff hike with identical charges on the same amount of imports.
The Scotiabank report warns that an all-out trade war with the US could cause a recession across North American's economies, noting that if the USA breaks trade ties with its partners and imposes 20 per cent across-the-board tariffs, Canada's economy would shrink 1.8 per cent.
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The Dow Jones industrial averaged dropped 410 points, or 1.6 percent after the opening bell on worries that the tit-for-tat tariff threats between the United States and China may turn into an all-out economic brawl.
Chinese regulators also have the option of broadening their retaliation by tying up American companies in tax or anti-monopoly investigations or by denying or revoking licenses. Trump slapped tariffs on steel and aluminum from Canada, Mexico and the European Union, threatened to kill the North American Free Trade Agreement and is studying new tariffs on auto imports.
Trump's latest comments came hours after US Secretary of State Mike Pompeo accused China of engaging in "predatory economics".
The Canadian dollar weakened to a one-year low of C$ 1.3237 overnight, before paring some of its losses, as investors anxious about Canada's trade feud with the United States.
The process of negotiating a settlement "is now likely to become more protracted", said Morgan Stanley economists in a report.
In an interview with CNN earlier this month, Apple CEO Tim Cook said he didn't expect a full-blown trade war to break out and dismissed the notion that iPhones, which are assembled in China, would end up subject to tariffs.
The U.S. has also imposed tariffs this year of 25 percent on steel and 10 percent on aluminum from a wide range of nations, including China.
Led by President Donald Trump, U.S. officials have started a trade war with China in an effort to wring concessions from the country, which has surged economically over the past two decades due to cheap labor and lax intellectual property protections.
"This is a global trade war, plain and simple, and the American families will be the ones who suffer most", added Hun Quach, vice president of worldwide trade for the Retail Industry Leaders Association.