WASHINGTON -- The United States voiced willingness on Wednesday to negotiate a resolution to an escalating trade fight with China after Beijing retaliated against proposed U.S. tariffs on $50 billion in Chinese goods by targeting key American imports, including light vehicles, but the Chinese ambassador to Washington said it "takes two to tango."
China quickly hit back on Wednesday at Trump administration plans to slap tariffs on $50 billion in Chinese goods, retaliating with a list of similar duties on key U.S. imports such as cars, soybeans, planes, whiskey and chemicals.
The speed with which the trade struggle between Washington and Beijing is ratcheting up -- the Chinese government took less than 11 hours to respond with its own measures -- led to a sharp selloff in global stock markets and commodities.
Shares in General Motors, Ford Motor Co. and Tesla Inc. all slumped after the announcement by China before recovering ahead of the close of trading in New York on Wednesday.
Investors are wondering whether one of the worst trade disputes in many years could now turn into a full-scale trade war between the world's two economic superpowers.
"The assumption was China would not respond too aggressively and avoid escalating tensions. China's response is a surprise for some people," said Julian Evans-Pritchard, Senior China Economist at Capital Economics, noting that neither said had yet called for enforcement of the tariffs.
"It's more of a game of brinkmanship, making it clear what the cost would be, in the hopes that both sides can come to agreement and none of these tariffs will come into force," he said.
Asked whether the tariffs announced by the United States on Tuesday may never go into effect and may be a negotiating tactic, Trump's top economic adviser, Larry Kudlow, told reporters, "Yes, it's possible. It's part of the process."
When Kudlow was asked whether the United States could lose a trade war, he said, "No. I don't see it that way. This is a negotiation, using all the tools."
Cui Tiankai, China's ambassador to the United States, held an hour-long meeting at the U.S. State Department in Washington with acting Secretary of State John Sullivan.
"Negotiation would still be our preference, but it takes two to tango. We will see what the U.S. will do," the ambassador said afterward.
U.S. officials said the United States may pursue negotiations with China to resolve deepening differences over trade, but declined to say whether new high-level meetings were planned. Kudlow said backchannel talks were already going on.
A U.S. trade official, speaking on condition of anonymity, said Beijing's action on Wednesday was an attempt to "intimidate" the United States to "back down" from its trade demands.
U.S. Commerce Secretary Wilbur Ross told CNBC, "It wouldn't be surprising at all if the net outcome of all this is some sort of a negotiation."
Beijing's list of 25 percent additional tariffs on U.S. goods covers 106 items with a trade value matching the $50 billion targeted on Washington's list, China's commerce and finance ministries said. The effective date depends on when the U.S. action takes effect.
In a statement, General Motors said, "We support a positive trade relationship between the U.S. and China, and urge both countries to continue to engage in constructive dialogue and pursue sustainable trade policies. We continue to believe both countries value a vibrant auto industry and understand the interdependence between the world’s two largest automotive markets."
Ford Motor Co. said it encouraged both governments to work together to resolve issues.
Ford, which has struggled to gain sales momentum with joint ventures in China, ships several high-priced models from North American plants to China. The exports include the Michigan-built Ford Mustang, the Chicago-assembled Ford Explorer crossover, the Ford F-150 Raptor and several Lincoln models built within the NAFTA zone.