China targets $3B of U.S. goods

China announced a $3 billion list of U.S. goods for possible retaliation in a tariff dispute with President Donald Trump and girded Friday for a bigger battle over technology policy as financial markets sank on fears of global disruption.

The Commerce Ministry said higher duties on pork, apples, steel pipe and other goods would offset Chinese losses due to Trump’s tariff hike on steel and aluminum imports. It urged Washington to negotiate a settlement but set no deadline.

In a separate and potentially bigger dispute, the ministry criticized Trump’s decision Thursday to approve a possible tariff hike on Chinese imports worth up to $60 billion over Beijing’s technology policy. It gave no indication of a possible response but a foreign ministry spokeswoman said Beijing was “fully prepared to defend” its interests.

“We don’t want a trade war, but we are not afraid of it,” said the spokeswoman, Hua Chunying.

Financial markets sank on concern the escalating tensions might disrupt the biggest global trading relationship or lead other nations to raise import barriers.

Tokyo’s benchmark tumbled by an unusually large 5.1 percent while the Shanghai Composite Index closed down 3.4 percent.

The dollar dipped to 104.90 yen as investors shifted into the Japanese currency, which is viewed as a “safe haven” from risk.

China’s response Friday appeared to be aimed at increasing domestic U.S. pressure on Trump by making clear which exporters, including farm areas that voted for him in 2016, might be hurt.

The list announced Friday was linked to Trump’s steel and aluminum tariffs , but companies already were looking ahead to a battle over complaints Beijing steals or forces companies to hand over technology.

The tensions reflect the dueling nationalistic ambitions of Trump and his Chinese counterpart, Xi Jinping.

The Commerce Ministry announcement Friday made no mention of jetliners, soybeans or other products that are the biggest U.S. exports to China by value. That leaves Beijing room to take more drastic steps.

Chinese officials are trying to figure out how to address U.S. concerns, said Jake Parker, vice president for China operations of the U.S.-China Business Council, which represents American companies that do business with China.

Instead, the Trump administration wants Chinese leaders to address more basic structural issues that interfere with market forces, said the official.

Chinese purchases of those goods last year totaled $3 billion, the ministry said.

Associated Press An investor looks at a stock price display screen at a brokerage house in Shanghai on Friday.