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China announced plans to raise duties on some American importsstarting June 1, defying a call from President Donald Trump toresist escalating a trade war that is sending stocks tumbling andclouding the outlook for the global economy.

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Less than two hours after Trump tweeted a warning that “Chinashould not retaliate—will only get worse!” the Ministry of Financein Beijing unveiled the measures on its website. The new rate of 25percent will apply to 2,493 U.S. products, with other goods subjectto duties ranging from 5 percent to 20 percent, it said.

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The next salvo was poised to come later Monday, when the Trumpadministration is expected to provide details of its plans toimpose a 25 percent additional tariff on all remaining imports fromChina—some $300 billion in trade.

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U.S. stocks sank in New York, with the S&P 500 headed forits biggest decline since January 3. Trade war fears hit the sharesof companies from Apple Inc. to Boeing Co., while Treasuriesrallied with the yen on demand for for haven assets.

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Higher U.S. tariffs will drive up the Federal Reserve'spreferred measure of underlying inflation, and further escalationcould raise consumer prices even more and dent U.S. growth, GoldmanSachs Group Inc. economists said in a research note.

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China's move to hike tariffs came in response to the U.S.'sdecision last week to increase levies on $200 billion in Chineseimports to 25 percent, from 10 percent. Trump on Monday accusedChina of backing out of a deal that was taking shape with U.S.officials, saying Beijing reneged on an agreement to enshrine awide range of reforms in Chinese law.

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“I say openly to President Xi & all of my many friends inChina that China will be hurt very badly if you don't make a dealbecause companies will be forced to leave China for othercountries,” Trump wrote on Twitter. “You had a great deal, almostcompleted, & you backed out!”

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China's retaliation on Monday matches Trump's latest move inthat it simply hikes the duties on a list of thousands of itemsthat had already been targeted in an earlier phase of the tradewar.

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Beijing's retaliation on about $60 billion of U.S. goodsincludes extra tariffs of as much as 25 percent on goods rangingfrom small aircraft, computers, and textiles to chemicals, meat,wheat, wine, and liquefied natural gas (LNG). Some auto partsremain exempted from retaliatory charges. Imports of cars aren'taffected, as an extra duty of 25 percent from a separate list wassuspended during the negotiations as a sign of goodwill.

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Investors in BMW AG and Daimler AG breathed a sigh of relief asfinished vehicles were left off the list of good targeted by Chinatariffs. The German carmakers are the biggest importers into theChinese market of vehicles from the U.S. They would have been hardhit, along with Tesla and Ford, had China decided to raise theimport duty on U.S.-built autos to 40 percent, from 15 percent.

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Both the U.S. and China had tried to project calm since thelatest round of discussions ended on Friday and said that they planto continue negotiations in the hopes of avoiding a tumble inmarkets and broader economic damage. But that facade masksfundamental divisions, with U.S. officials increasingly convincedthat hardliners in Beijing are winning the internal debate onreforms.

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Meanwhile, Chinese state media blamed the United States for theimpasse and talked up its economic resilience, with the People'sDaily saying in a front-page commentary that the U.S. should takefull responsibility for the setbacks because it went back on itsword and imposed more levies.

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The latest breakdown has prompted an escalation in the tariffwar between the world's two largest economies that looksincreasingly like the International Monetary Fund's (IMF's) andothers' worst-case scenario for a global economy already forecastto grow this year at its slowest rate since the immediate aftermathof the 2008 financial crisis.

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