Washington, Mar 23 (Just News): The US plans to impose tariffs on about $50bn in Chinese goods and limit the country’s investment activity in the US as payback for what it alleges is years of intellectual property theft.
The White House said the actions are a necessary step to counter unfair competition from China's state-led economy.
It said years of talks about the issue failed to produce change.
China said it was ready to retaliate with "necessary measures".
The back-and-forth, following other trade penalties the Trump administration has imposed on foreign goods such as steel and aluminium, has raised the spectre of a trade war.
US stock markets sank ahead of the announcement on Thursday, but pared losses as the president seemed to indicate his willingness to negotiate.
US President Donald Trump said he is looking for "reciprocal" trade terms for American companies.
"We've spoken to China and we're in the midst of a very large negotiation," he said at the White House as he signed a memo regarding the activities. "We'll see where it takes us."
What is behind the tariffs?
The tariffs follow an investigation of Chinese policies that US President Donald Trump ordered in August.
The White House said the review, called a 301 investigation, found a range of "unfair" practices, including using restrictions on foreign ownership that pressure companies into transferring technology.
The US also found evidence that China imposes unfair terms on US companies; steers investments in the US to strategic industries; and conducts and supports cyber attacks.
The White House said it has prepared a list of more than 1,000 products that could be targeted by tariffs. Businesses will have the opportunity to comment before the final list goes into effect.
The US is also exploring ways to limit Chinese investment in the US and will seek to bring complaints about unfair licensing terms to the World Trade Organization, officials said.
America's top trade negotiator, Robert Lighthizer, said protecting US technology is critical to America's economic future.
"This is an extremely important action, very significant, very, very important for the future of the country," he said.
What has China said?
On Thursday, China's commerce ministry said it was ready to retaliate against the new tariffs.
"China will not sit idly by and let its legitimate rights and interests be harmed, and will certainly take all necessary measures to resolutely defend its legitimate rights and interests," it said in a statement.
According to the Wall Street Journal, China is preparing to hit back with tariffs aimed at President Donald Trump's support base.
This would include levies targeting US agricultural exports from Farm Belt states.
Frank Lavin, chief executive of Export Now and a former US ambassador to Singapore, said China typically takes some kind of action, but avoids escalating the problem.-BBC