China's government has criticized the latest US threat of a tariff hike as "totally unacceptable" and vowed to retaliate in their escalating trade war.
A Commerce Ministry statement said Beijing will use revenue from the higher import duties to "alleviate the impact on enterprises and employees" but gave no details. It said, "the Chinese government will be forced to impose necessary countermeasures" to protect its "core interests".
The S&P 500 also fell 0.7 percent and the Nasdaq Composite dropped 0.6 percent.
The clock now starts ticking on a two-month period of public comment before the levies are imposed.
It seems that the U.S. is escalating the scale of this trade friction.
The survey, conducted between April 10 and May 10, reflects the mix of key concerns and realities for American businesses in China at a time of heightened uncertainty as the Trump administration raises the ante in its trade war with Beijing.
"As a result of China's retaliation and failure to change its practices, the president has ordered USTR to begin the process of imposing tariffs of 10% on an additional $200 billion of Chinese imports", Lighthizer said.
However, it will be impossible to reciprocate in-kind on the new September tariffs given that China only imports around $150 billion worth of United States goods. And American consumers will have to pay the high price because USA firms will have to buy them despite the high tariffs.
Investors fear an escalating Sino-U.S. trade war could hit global growth and damage sentiment.
US opened lower after a stretch of gains.
Japan's benchmark Nikkei 225 fell 1.2 percent, and the South Korean Kospi lost 0.6 percent, while Hong Kong's Hang Seng shed 1.3 percent.
Senate Finance Committee Chairman Orrin Hatch, a senior member of Trump's Republican Party, said the announcement "appears reckless and is not a targeted approach".
Tariffs are a "dangerous and very blunt instrument", Harborn said.
More broadly, American officials worry Chinese government plans such as "Made in China 2025", which calls for creating competitors in robots, biotech, artificial intelligence and other fields, might erode US technology leadership and prosperity.
China's exports have mushroomed since it joined the World Trade Organization in 2001, making it the world's second-largest economy and prompting widening criticism in recent years from trading partners that it has unfairly used global trade rules to its advantage.
And it marks a new phase in the USA trade war with China. The initial USA tariff list focused on Chinese industrial products to help limit the impact on American consumers.
Indexes in Europe and Asia took steeper losses as investors anxious the worsening trade dispute will hamper the growth of the global economy.
The U.S. economy is in what many would consider "goldilocks" mode-with unemployment at lows not seen in almost two decades and strong GDP growth.
On Monday, Chinese and German companies including BASF and Volkswagen signed business deals worth 20 billion euros ($23.6 billion) during a visit to Berlin by China's No. 2 leader, Premier Li Keqiang.