Update 2145ET: China markets have opened and its a bloodbath...

Stocks are down 3-5% across the board at the open with CHINEXT (China tech) plunging most...

Tencent is down over 11% in the last two days - the biggest drop in 10 years...

And China commodities are in freefall with Rubber futures limit down, Iron Ore and Steel Rebar down hard

The big question is - will China's National Team step in?

* * *

Update 2115ET: AsiaPac stocks are a sea of red but there is one relief as China fixes the Yuan very modestly weaker - so no devaluation tonight...

* * *

Update 1 : Japanese stocks just broke key technical support at the 200-day moving average, dropping near 6-month lows...

Japan eseTrade Minister Hiroshige Seko told reporters:

It’s “very unfortunate” that the U.S. decided to apply tariffs to Japanese metals exports, but retaliation by Japan could lead to the collapse of the free-trade system.

He noted that he had repeatedly asked the U.S. for Japan to be exempted from tariffs, and will continue to do so.

* * *

As we detailed earlier, following the earlier threat from the Chinese embassy, the first retaliatory trade actions from China are emerging and US and Japanese equity markets are in freefall...

Following the US imposition of 25% duties on China produce worth at least $50 billion including items in aerospace, information and communication technology and machinery, China has announced plans of reciprocal tariffs on $3 billion of U.S. imports.

China plans to add 15% tariffs on U.S. steel pipes, fruit, wine and other products, the Ministry of Commerce says in a statement, and also plans to add 25% tariffs on pork and recycled aluminum.

Bloomberg provides some more details on the list of goods China will be targetting...

1) fresh fruit, dried fruit and nuts

2) wine

3) denatured ethyl alcohol

4) American ginseng

5) seamless steel pipes

6) pork and pork products

7) aluminum scrap

Who knew America exports ginseng to China?

In the statement, China urged the U.S. to resolve the trade dispute via dialogue.

The reactions are ugly.

USDJPY is in freefall, plunging below 105.00 to its lowest since before Trump's election...

Nikkei is set to open down over 3.5% and Dow futures are down another 200 points from the close...

Based on the rally in Treasury futures, 5- to 10-year Treasury yields will open 2.5-3bps lower.

As Bloomberg's Enda Curran notes, China's response was to be expected but it's clearly only an opening play. Note the list of tariffs doesn't include politically sensitive imports like soybeans. It's a warning shot from Beijing.

All eyes will now be on the PBOC's Yuan fixing, as offshore yuan has been tumbling...

It would be a big shock if China decides to devalue suddenly as a trade weapon.