The United States is dropping a trade sledgehammer on China. On March 22, U.S. President Donald Trump signed a presidential memorandum that could lead to tariffs on $60 billion worth of Chinese imports to the United States. Though the exact products to be hit with tariffs has not been finalized, the tariffs will target 10 high-tech sectors that make up China's "Made in China 2025" plan such as aerospace, robotics and advanced medical technologies. China's alleged unfair intellectual property practices have contributed to its rise in these sectors, which have long-term strategic significance. China is not going to take these trade measures lightly, and the many areas of overlap between the U.S. and Chinese economies provides Beijing with plenty of options for retaliation.

China could, for example, target U.S. agricultural products such as soybeans or sorghum with trade measures of its own. Such measures would be relatively painless for China, as sorghum is primarily used as an animal feed and could be replaced with alternatives, and soybean producers in Latin America could step in to fill a void in China's market.

As China plans its next move, Trump appears to be planning his own. Even with the ink still wet on the new tariffs, which will not go into effect until after a one-month comment period, Trump ordered the Treasury Department to draft potential restrictions on investment from Chinese companies into strategic sectors. The investment restrictions are not finalized, but the White House was reportedly considering a special system for Chinese investments earlier this year. Under that system, the United States would treat Chinese investment into U.S. sectors similarly to how China treats U.S. investment.

With today's tariff announcement, Trump has finally made his first major move against China. As China and the United States plan their next move, both sides will need to be careful to avoid a trade war of reciprocity that would likely damage the interests of both sides.