China's government has said it will retaliate against US President Donald Trump's tariff hike by immediately imposing penalties of the "same scale" on American goods.
The Commerce Ministry said on Friday it would also scrap deals made with Washington in talks aimed at defusing a much feared trade dispute.
A statement did not indicate which US goods would be targeted, but China announced in April that products including soybeans, light aircraft, orange juice, whiskey and beef would be penalised.
It read: "The Chinese side doesn't want to fight a trade war, but facing the shortsightedness of the US side, China has to fight back strongly.
"We will immediately introduce the same scale and equal taxation measures, and all economic and trade achievements reached by the two sides will be invalidated."
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Mr Trump announced on Friday that a 25% tariff would be imposed on $50bn in Chinese imports.
The move will escalate the trade dispute between the world's two largest economies and deepen the trade war between the US and a host of others, including the European Union.
Mr Trump has also previously warned of "additional tariffs" should China hit back.
In a statement, he said: "The United States can no longer tolerate losing our technology and intellectual property through unfair economic practices.
"These tariffs are essential to preventing further unfair transfers of American technology and intellectual property to China, which will protect American jobs."
The tariffs cover 1,102 separate product categories, including jet engines, water pumps, and industrial dishwashers, according to the US Trade Representatives Office.
It comes after an "exhaustive investigation" found that China's "acts, policies and practices related to technology transfer, intellectual property, and innovation are unreasonable and discriminatory, and burden US commerce", the USTR said.
US trade representative Robert Lighthizer said: "China's government is aggressively working to undermine America's high-tech industries and our economic leadership through unfair trade practices and industrial policies like Made in China 2025.
"Technology and innovation are America's greatest economic assets and President Trump rightfully recognises that if we want our country to have a prosperous future, we must take a stand now to uphold fair trade and protect American competitiveness."
The FTSE 100 had been hovering around 0.8% down but slid further to be just over 1% down in the minutes after the announcement, while the pan European STOXX 600 fell 0.6%.
Wall Street stocks also fell in early trading following the news.
Just a few weeks ago, Mr Trump brought in 25% tariff on steel and a 10% tariff on aluminium from the EU, Canada and Mexico, citing national security interests.
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