Although the U.S. and Chinese governments had agreed not to launch a trade war by imposing tariffs on the imports of each others’ goods, U.S. President Donald Trump has announced he will slap 25% tariffs on USD50 billion of Chinese imports and restrict Chinese investment in the American high-tech industry. Meanwhile, U.S. Commerce Secretary Wilbur Ross held two days of trade talks in Beijing in the third round of bilateral talks between Trump’s top economic advisers and China’s chief negotiator in the trade dispute, Vice Premier Liu He. Ross and Liu focussed on filling in the details of the May 19 agreement to reduce China’s trade surplus with the U.S.

At the end of the talks on June 3, China issued a laconic statement saying that: “To implement the consensus reached in Washington, the two sides have had good communication in various areas such as agriculture and energy, and have made positive and concrete progress while relevant details are yet to be confirmed by both sides.” There was no indication of further tangible progress.“The outcome of the talks should be based on the prerequisite that the two parties meet each other halfway and will not engage in a trade war,” the statement added “All economic and trade outcomes of the talks will not take effect if the U.S. side imposes any trade sanctions including raising tariffs.”

Nearly 3,000 stocks, or 85% of the stocks listed on China’s A-share market, fell after the U.S. announcement on tariffs, with telecoms and internet sectors sinking the lowest. More than 180 A-shares sank by the daily maximum 10% limit.

Further details on the tariffs will be announced by June 15 and they will go into effect “shortly thereafter”, the White House said. Restrictions on China’s access to sensitive U.S. technology will be announced on June 30. The Chinese government said the announcement “is obviously in violation of the consensus reached in Washington recently by both China and the United States.”

The action is part of “multiple steps to protect domestic technology and intellectual property from certain discriminatory and burdensome trade practices by China”, the White House added. But some analysts said the threat of tariffs was just a negotiating tactic and its imposition could still be avoided following negotiations.

Xinhua news agency said China hoped that the U.S. would not act impulsively but also that it stood ready to fight to protect its interests. “China’s attitude, as always, is: we do not want to fight, but we are also not afraid to fight,” it said in a commentary.

American business leaders in China have urged policymakers in Washington and Beijing to focus on issues such as fairness and reciprocal treatment rather than putting too much emphasis on cutting the trade deficit in their next round of talks. Alfred Schipke, Senior Resident Representative in China of the International Monetary Fund (IMF), said: “It is important that both sides try to collaborate. These trade tensions are not beneficial for anybody.” The IMF kept its forecast for China’s 2018 economic growth flat at 6.6%, but warned that overly rapid credit growth and trade frictions could pose risks for the Chinese economy. Earlier in January, the IMF raised its forecast for China’s economic growth this year to 6.6% from 6.5%.

The Chinese government, from its side, decided to further cut tariffs on a number of imported goods starting on July 1. Average tariff rates for clothes, shoes, hats, kitchenware and sports products will be reduced to 7.1% from the current 15.9%. Average rates for household appliances like washing machines and refrigerators will drop to 8%, 12.5 percentage points lower. Tariffs on aquatic products and mineral water will be 6.9% on average, down from the existing 15.2%, while cleaning products, cosmetics and some healthcare products will be levied at 2.9%, down from the present 8.4%. The tariff reductions have nothing to do with the U.S. dispute, but will be beneficial to opening-up and meet public demand, the Chinese government said.