China has raised the stakes in the escalating trade showdown with the US, unveiling tariffs on a targeted list of American imports in response to levies on more than 1,300 Chinese goods put forward by Donald Trump.

Sending a message to Washington that economic threats made by the Trump White House would be matched with equal force, Beijing said it would impose additional tariffs of 25% on 106 American products from 14 categories; including soybeans, cars and chemical products.

Wall Street slumped as financial markets around the world were rocked by the potential for tensions to mount further, in the latest advance towards a full-blown trade war between the two nations that would have damaging consequences for the global economy. The Dow Jones later recovered much of that lost ground and was down only 36 points at lunchtime in New York.

Chinese state news agencies said the new tariffs – which are a tax on imported goods – would cover shipments from the US worth up to $50bn (£36bn).

China’s response came after fresh details were announced by the US just hours earlier for 25% tariffs on $50bn of imports from China, in a move designed to target the country’s industrial base. Covering a list of 1,333 products, the measures brought forward by Trump will hit everything from China’s industrial robots and electronics to metal alloys, aircraft parts, vaccines and dishwashing machines.

Washington said the levies were in response to China’s “unfair trade practices related to the forced transfer of US technology and intellectual property”, adding that the list of products had been designed to target China’s industrial plans while minimising the impact on the US economy.

The array of Chinese products that would be affected also includes aircraft tyres, depleted uranium and nuclear reactors, poultry incubators, haymaking machines and guns and ammunition. Technology products are also hit, including TV cameras, jukeboxes and cassette players.

However, the threat of Chinese tariffs on American soyabeans could hurt the US economy. The agricultural product is one of the top goods shipped to China. Many farming states that backed Trump, including Iowa, rank among the top exporters and could be hard hit.

Civilian aircraft, engines and parts were the top export from the US to China last year, worth $16.3bn, followed by soybeans worth $12.4bn. The top imports the other way included goods such as mobile phones worth $70.4bn and computers worth $45.5bn.

While the latest escalation brings the two nations closer to the brink of a trade war, there are still hopes that the economic conflict can be resolved via the World Trade Organisation.

Wang Shouwen, the Chinese vice-minister of commerce, used a press conference to say China did not want a trade war because it would be “lose-lose” for both countries. Cooperation would be the only right choice, he said.

President Trump tweeted after the Chinese countermeasures: “We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the US.”

The proposed list of Chinese products up for fresh tariffs in the US will now undergo a public review process before trade officials ultimately decide which products should be hit.

The Chinese state news agency Xinhua said the country would only implement its tariffs on American goods when the US government imposed levies on imports from China. Some types of aircraft, together with lubricants, tobacco and orange juice are on the list of products targeted by Beijing, along with some trucks and SUVs.

The rising tensions come following an investigation into Chinese intellectual property practices ordered by Trump, as well as at a time when the US is entering negotiations with Beijing over its $375.2bn trade deficit in goods with China.

Wilbur Ross, the US commerce secretary, attempted to calm concerns over the rising trade tensions. In an interview with CNBC, he said China’s tariffs “amount to about three-tenths of a per cent of our GDP. So, it’s hardly a life-threatening activity.”

The consultancy Capital Economics estimates the US tariffs on goods made in China would have covered about $46bn of imports last year, which would be a small fraction of the nation’s overall $2.4tn of imported goods.

It said China was unlikely to want to go ahead with its countermeasures, as that would have a damaging effect on the price of soyabeans for Chinese consumers.